A firm evaluates all of its projects by applying the IRR rule. If the required return is
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Question:
A firm evaluates all of its projects by applying the IRR rule. If the required return is 14 percent, should the firm accept the following project?
year 0 1 2 3
cash flow (28,000) 12,000 15,000 11,000
Suppose the firm uses NPV decision rule:
At a required return of 12 percent, should the firm accept this project?
What if the required return is 21 percent?
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