A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 28,400 1 12,400 2 15,400 3 11,400 If the required return is 15 percent, what is the IRR for this project? Should the firm accept the project?
A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 28,400 1 12,400 2 15,400 3 11,400 If the required return is 15 percent, what is the IRR for this project? Should the firm accept the project?
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 1P
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A firm evaluates all of its projects by applying the
Year | Cash Flow | ||
0 | –$ | 28,400 | |
1 | 12,400 | ||
2 | 15,400 | ||
3 | 11,400 |
If the required return is 15 percent, what is the IRR for this project?
Should the firm accept the project?
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