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Financial Management: Theory & Practice

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter26: Real Options

Section: Chapter Questions

Problem 9SP

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Question

Pet World is considering a project that has the following cash flow data.
Year
Cash flows
0
-$9,500
1
2
3
4
$2,000 $2,025 $2,050 $2,075 $2,100
If the required rate of the return on similar projects is 3%, the firm should
IRR is
5
this project because its
accept; 2.31%
reject; 2.57%
reject; 2.82%
reject; 2.08%
accept; 3.10%

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