The ABC Company has determined that its cost of money is 0.

The ABC Company has determined that its cost of money is 0.12. However, because of a series of necessary nonproductive (not generating cash flows) investments, it has found that on the average a discretionary investment must earn 0.15 in order for the firm to break even. The firm has a chance to undertake an investment that has an internal rate of return of 0.14 and no risk. This investment will also not affect the amount of nonproductive investments needed. Should the investment be accepted?

 

 

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