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QUESTION
Assume the following for a project under evaluation: The project's life is 4 years. The total time zero, initial cost of $55,000. The total net...
Assume the following for a project under evaluation:
The
project's life is 4 years.
The
total time zero, initial cost of $55,000.
The
total net operating cash flow each year is $15,000.
In
addition to the terminal year operating cash flow,
there is a nonoperating,
terminal year cash flow of
$8,000.
What is the project's IRR? Accept or reject the project?
Again, assume the cost of capital for a project of this risk
is 7%.
7%; indifferent to accept or reject
8.4%; reject
8.4%; accept
15.75%, reject
15.75%: accept
Net Present Value Present Value of Cash Inllow , Calculated By = Cash Inflow ‘ 1 [[1+rate]“n Internal Rate of Return : Cash lluwl in million $1 PresentValue @796 Wuft‘asll flaws Calculatiun...