Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be $4.91million per year. Your upfront setup costs to be ready to produce the part would be $7.93 million. Your discount rate for this contract is 7.6%. What is the IRR?____________________% (Round to 2 decimal places) The NPV is $4.82 million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule? _______________________
Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be $4.91million per year. Your upfront setup costs to be ready to produce the part would be $7.93 million. Your discount rate for this contract is 7.6%. What is the IRR?____________________% (Round to 2 decimal places) The NPV is $4.82 million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule? _______________________
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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Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be $4.91million per year. Your upfront setup costs to be ready to produce the part would be $7.93 million. Your discount rate for this contract is 7.6%.
What is the IRR?____________________% (Round to 2 decimal places)
The NPV is $4.82 million, which is positive so the NPV rule says to accept the project.
Does the IRR rule agree with the NPV rule? _______________________
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