A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 28,400   1   12,400   2   15,400   3   11,400 If the required return is 15 percent, what is the IRR for this project?   Should the firm accept the project?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
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Chapter10: Capital Budgeting: Decision Criteria And Real Option
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A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows:

Year Cash Flow
0 –$ 28,400  
1   12,400  
2   15,400  
3   11,400

If the required return is 15 percent, what is the IRR for this project?

 

Should the firm accept the project?

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