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5. Calculating IRR If the required return is 11 percent, should the firm accept the following project? rule. LO 3 Year Cash Flow --$157,300 74,000 87,000 3 46,000 6. Calculating NPV For the cash flows in the previous problem, suppose the firm uses the NPV decision rule. At a required return of 9 percent, should the firm accept this project? What if the required return was 21 percent? LO 4

5. Calculating IRR If the required return is 11 percent, should the firm accept the following project? rule. LO 3 Year Cash Flow --$157,300 74,000 87,000 3 46,000 6. Calculating NPV For the cash flows in the previous problem, suppose the firm uses the NPV decision rule. At a required return of 9 percent, should the firm accept this project? What if the required return was 21 percent? LO 4

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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5. Calculating IRR A firm evaluates all of its projects by applying the IRR rule If the required return is 11 percent, should the firm accept the following project? LO 3 Year Cash Flow 11 LO 3 -$157,300 LO 4 1 74,000 87,000 3. 46,000 6. Calculating NPV For the cash flows in the previous problem, suppose the firm uses the NPV decision rule. At a required return of 9 percent, should the firm accept this project? What if the required return was 21 percent? LO 4
Transcribed Image Text:5. Calculating IRR A firm evaluates all of its projects by applying the IRR rule If the required return is 11 percent, should the firm accept the following project? LO 3 Year Cash Flow 11 LO 3 -$157,300 LO 4 1 74,000 87,000 3. 46,000 6. Calculating NPV For the cash flows in the previous problem, suppose the firm uses the NPV decision rule. At a required return of 9 percent, should the firm accept this project? What if the required return was 21 percent? LO 4
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