A project with a 3-year life has a payback period of 2.48 years and an NPV of -$162 using a discount rate of 11.50%. Assume that the initial cash flow is negative and all future cash flows are positive. Without any additional calculations, what is the LOWER bound on the project's IRR? That is, given this project's cash flow metrics, what must the IRR be at a minimum?

A project with a 3-year life has a payback period of 2.48 years and an NPV of -$162 using a discount rate of 11.50%. Assume that the initial cash flow is negative and all future cash flows are positive. Without any additional calculations, what is the LOWER bound on the project's IRR? That is, given this project's cash flow metrics, what must the IRR be at a minimum?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter14: Real Options

Section: Chapter Questions

Problem 4MC

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