Question
Consider the following project: Year CF 0 -120 1 40 2 30 3 30 4 30 5 30 6 30 7 20 The discount rate
Consider the following project:
| Year | CF | |
| 0 | -120 | |
| 1 | 40 | |
| 2 | 30 | |
| 3 | 30 | |
| 4 | 30 | |
| 5 | 30 | |
| 6 | 30 | |
| 7 | 20 |
The discount rate for the project is 7%.
A. If utilization of IRR rule is feasible - would you accept or reject this project? Why?
B. Your company decided to adopt all projects that pay back on discounted basis within 4 years after adoption. Based on your company decision - will this project be undertaken? Why?
C. Ultimately, trying to make the most correct valuation decision - would you accept or reject this project? Why?
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
A To determine whether to accept or reject the project using the IRR rule we need to calculate the p...
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Step: 2
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Introduction To Statistical Quality Control
Authors: Douglas C Montgomery
7th Edition
1118146816, 978-1-118-3225, 978-1118146811
