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Consider the following cash flows: Year  0  1  2  3  4  5  6  Cash Flow  -$9,000  $2,000  $3,600  $2,700  $2,100  $2,100  $1,600    C. IRR. Calculate the IRR for this project. The company’s required rate of return is 10%. Should it be accepted or rejected?    D. NPV. Using a 10% required rate of return, calculate the NPV for this project. Should it be accepted or rejected?    E. PI. Calculate the Profitability Index (PI) for this project. Should it be accepted or rejected?

Consider the following cash flows: Year  0  1  2  3  4  5  6  Cash Flow  -$9,000  $2,000  $3,600  $2,700  $2,100  $2,100  $1,600    C. IRR. Calculate the IRR for this project. The company’s required rate of return is 10%. Should it be accepted or rejected?    D. NPV. Using a 10% required rate of return, calculate the NPV for this project. Should it be accepted or rejected?    E. PI. Calculate the Profitability Index (PI) for this project. Should it be accepted or rejected?

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 6PB: There are two projects under consideration by the Rainbow factory. Each of the projects will require...
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Consider the following cash flows: Year 

0 

1 

2 

3 

4 

5 

6 

Cash Flow 

-$9,000 

$2,000 

$3,600 

$2,700 

$2,100 

$2,100 

$1,600 

 

C. IRR. Calculate the IRR for this project. The company’s required rate of return is 10%. Should it be accepted or rejected? 

 

D. NPV. Using a 10% required rate of return, calculate the NPV for this project. Should it be accepted or rejected? 

 

E. PI. Calculate the Profitability Index (PI) for this project. Should it be accepted or rejected? 

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