Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 19EA: Redbird Company is considering a project with an initial investment of $265,000 in new equipment...
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NPV/IRR. Growth Enterprises believes its latest project, which will cost $80,000 to install, will
generate a perpetual growing stream of cash flows. Cash flow at the end of the first year will be
$5,000, and cash flows in future years are expected to grow indefinitely at an annual rate of 5%.
(LO8-1 and LO8-2)
a. If the discount rate for this project is 10%, what is the project NPV?
b. What is the project IRR?
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