Q.6. Barclays International can invest in a capital budgeting project that has a 8% cost of capital .The company's expected future net cash flows are as follow: K'000 Year 1 300,000 400,000 300,000 150,000 Year 2 Year 3 Year 4 a) Calculate the IRR of Barclay's capital budgeting project given that the initial outlay required is K800 million b) What are the main merits and demerits of IRR method?

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
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Q.6. Barclays International can invest in a capital budgeting project that has a 8% cost of
capital .The company's expected future net cash flows are as follow:
K'000
Year 1
300,000
400,000
300,000
150,000
Year 2
Year 3
Year 4
a) Calculate the IRR of Barclay's capital budgeting project given that the initial outlay
required is K800 million
b) What are the main merits and demerits of IRR method?
Transcribed Image Text:Q.6. Barclays International can invest in a capital budgeting project that has a 8% cost of capital .The company's expected future net cash flows are as follow: K'000 Year 1 300,000 400,000 300,000 150,000 Year 2 Year 3 Year 4 a) Calculate the IRR of Barclay's capital budgeting project given that the initial outlay required is K800 million b) What are the main merits and demerits of IRR method?
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