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An investment has been found to have two different IRRs, one at 14% and the other at 20%. When a required return of 17%
An investment has been found to have two different IRRs, one at 14% and the other at 20%. When a required return of 17% is used, the NPV of the investment is negative. Knowing this: a. What range of required returns will generate a negative NPV? b. What range of required returns will generate a positive NPV? Describe why choosing an investment with the highest Profitability Index might not always result in getting the highest NPV?
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Answer I Given that the necessary return of 17 which falls between the two IRRs of 14 and 20 results in a negative net present value NPV the range of required returns that will do so is as follows 20 ...
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
