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A company is considering an investment that requires an immediate investment of $500,000 and an additional investment of $175,000 in year 3. The investment will

A company is considering an investment that requires an immediate investment of $500,000 and an additional investment of $175,000 in year 3. The investment will generate annual profits of $180,000 for five years, starting from year 2.

a. Calculate the IRR for this investment.

b. If the cost of capital is 8.5%, should the company undertake the investment?

Yes

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