Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:Granite Holdings is considering a capital budgeting project with a life of 7 years that requires an initial
outlay of $277,400. There are four possible cash flow values:
Incremental Free Cash Flow
-$15,000
18,000
65,000
99,000
Probability
4%
16%
55%
25%
1) The risk-adjusted required rate of return for this project is 12%. Calculate the
risk-adjusted net present value of the project and the project's IRR.
2) Should the project be accepted?
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