Mathematics · Financial Management and Investment Appraisal

Swan Co is considering a project with the following cash flow profile: - Initial Outlay (Year 0): $1,200,000 - Net Inflows (Years 1-3): $650,000 per year - Decommissioning Cost (Year 4): $800,000 The company's weighted average cost of capital (WACC) is 10%. Which of the following statements regarding the appraisal of this project is/are correct? (1) The project may have up to two Internal Rates of Return (IRRs). (2) If the IRR is greater than 10%, the project is always acceptable regardless of the NPV. (3) The NPV method is superior here because the IRR reinvestment assumption is less realistic.