Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $4 93 million per year Your upfront setup costs to be ready to produce the part would be $7.97 million Your discount rate for this contract is 7.7% a. What is the IRR? b. The NPV is $4 80 million, which is positive, so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule? a. What is the IRR? The IRR IS% (Round to two decimal places)

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 5PA: Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated...
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Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would
be $4.93 million per year Your upfront setup costs to be ready to produce the part would be $7.97 million Your discount rate for this contract is 7.7%
a. What is the IRR?
b. The NPV is $4.80 million, which is positive, so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule?
a. What is the IRR?
The IRR is (Round to two decimal places)
Transcribed Image Text:= Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $4.93 million per year Your upfront setup costs to be ready to produce the part would be $7.97 million Your discount rate for this contract is 7.7% a. What is the IRR? b. The NPV is $4.80 million, which is positive, so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule? a. What is the IRR? The IRR is (Round to two decimal places)
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