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6. (a) Building a new mill requires $464.1 million more than modernizing the old mill but will generate an extra $67,093,320 in yearly cash flow.
6. (a) Building a new mill requires $464.1 million more than modernizing the old mill but will generate an extra $67,093,320 in yearly cash flow. Calculate the IRR on this incremental expenditure. Compare your answer to the 12 percent required return.
(b) Based on your answer in part (a), suggest a decision rule for the IRR in evaluating mutually exclusive alternatives with different initial costs.
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