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3 7 . ( NPV , PI , and IRR calculations ) Fijisawa Inc. is considering a major expansion of its product line and has
NPV PI and IRR calculations Fijisawa Inc. is considering a major expansion of its product line and has estimated the following free cash flows associated with such an expansion. The initial outlay would be $ and the project would generate incremental free cash flows of $ per year for years. The appropriate required rate of return is percent.
a Calculate the NPV
b Calculate the
c Calculate the IRR.
d Should this project be accepted?
a What is the project's NPV
Round to the nearest dollar.
b What is the project's
Round to three decimal places.
c What is the project's IRR?
Round to two decimal places.
d Should this project be accepted? Select the best choice below.
A No The project should be rejected because the project's NPV is negative, is less than one, and IRR is less than the required rate of return.
B Yes. The project should be accepted because the project's NPV is positive, is greater than one, and IRR is greater than the required rate of return.
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