An investment costs $23,958 and will generate cash flow of $6,000 annually for five years. The firm’s cost of capital is 10 percent. a.) What is the investment’s internal rate of return? Based on the internal rate of return, should the firm make the investment? b.) What is the investment’s net present value? Based on the net present value, should the firm make the investment?

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A:

Q: 16. You are considering an investment with the following cash flows: Year Cash Flow 0…

A: Year Cash Flow    0 -$50,000    1   $ 7,000    2   $ 4,000    3   $9,000    4   $61,000

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A: Modified net present value refers to the investment value that includes the flexibility value or…

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