Question
Eta Automotive plans to invest $500,000 in new technology. The expected annual cash flows are as follows: Year Cash Flows 0 -500,000 1 100,000 2
Eta Automotive plans to invest $500,000 in new technology. The expected annual cash flows are as follows:
Year | Cash Flows |
0 | -500,000 |
1 | 100,000 |
2 | 100,000 |
3 | 150,000 |
4 | 150,000 |
5 | 200,000 |
a. Determine the internal rate of return (IRR) for the investment. b. Should Eta Automotive invest in the technology if the company's required rate of return is 8%?
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Financial Accounting
Authors: Walter Harrison, Charles Horngren, William Thomas, Wendy Tietz
11th edition
978-0134065830, 134065832, 134127625, 978-0134127620
