# A firm evaluates all of its projects by applying the IRR rule. The required return for the following project is 21 percent. The IRR is _____ percent and the firm should ______ the project.    Year     cash flow       0      -\$28,643      1         21,000      2         16,000      3          4,000 67 percent; reject26 percent; accept26 percent; reject30 percent; accept30 percent; reject

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A firm evaluates all of its projects by applying the IRR rule. The required return for the following project is 21 percent. The IRR is _____ percent and the firm should ______ the project.

Year     cash flow

0      -\$28,643

1         21,000

2         16,000

3          4,000

1. 67 percent; reject
2. 26 percent; accept
3. 26 percent; reject
4. 30 percent; accept
5. 30 percent; reject
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Step 1

Calculation of IRR:

Step 2

The IRR is 26% (rounded to nearest) and the firm should ACCEPT the project. Because the IRR is higher than the required return of the pr...

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