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    Question

    A project has IRR of 13%. Bank’s cost of funds is 8%

    and risk premium required is 4%. What is the correct credit decision?
    A Accept comfortably Correct Answer Incorrect Answer
    B Accept marginally Correct Answer Incorrect Answer
    C Reject as unviable Correct Answer Incorrect Answer
    D Defer for review Correct Answer Incorrect Answer
    E Convert to WC loan Correct Answer Incorrect Answer

    Solution

    Hurdle rate = 8 + 4 = 12% IRR = 13% → just above hurdle

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