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#2. Consider, a capital expenditure project to purchase and install new equipment with an initial cash outlay of $33,000. The project is expected to generate
#2. Consider, a capital expenditure project to purchase and install new equipment with an initial cash outlay of $33,000. The project is expected to generate net after cash flows each year of $4800 for seven years and at the end of the project a one time after tax cash flow of $6,500 is expected. The firm has a weighted average cost of capital of 5% and requires a 3yr payback on projects of this type. Determine whether this project should be accepted or rejected using IRR.
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