Consider the cash flows of a certain project given in Table P7.25. TABLE P7.25 n Net Cash

Question:

Consider the cash flows of a certain project given in Table P7.25.
TABLE P7.25
n Net Cash Flow
0................................ -$150,000
1................................ 465,000
2................................ -330,000
The project's i*'s are computed as 10% and 100%, respectively. The firm's is 8%.
(a) Show why this investment project fails the net-investment test.
(b) Compute the IRR, and determine the acceptability of this project.
MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...