Fundamentals of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Fundamentals of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
9th Edition
ISBN: 9781259722615
Author: Richard A Brealey, Stewart C Myers, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
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Chapter 8, Problem 12QP

NPV/IRR. A new computer system will require an initial outlay of $20,000, but it will increase the firm’s cash flows by $4,000 a year for each of the next 8 years. (LO8-1)

  1. a. Is the system worth installing if the required rate of return is 9%?
  2. b. What if the required return is 14%?
  3. c. How high can the discount rate be before you would reject the project?
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