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I only have enough credit for one more question. I am aware that the rule states you only need to solve a limit of 5
I only have enough credit for one more question. I am aware that the rule states you only need to solve a limit of 5 answers. However, in this case there are people who are willing to help answer all of them. If you are one of them, please kindly help me answer all of these questions.
Please don't just answer the first question or the five questions, otherwise I'll hit the dislike button. Thank you
Consider the following case: Purple Whale Foodstuffs Inc. is evaluating a proposed capital budgeting project (project Delta) that will require an initial investment of $1,500,000. Purple Whale Foodstuffs Inc. has been basing capital budgeting decisions on a project's NPV; however, its new CFO wants to start using the IRR method for capital budgeting decisions. The CFO says that the IRR is a better method because percentages and returns are easier to understand and to compare to required returns. Purple Whale Foodstuffs Inc.'s WACC is 9%, and project Delta has the same risk as the firm's average project. The project is expected to generate the following net cash flows: Which of the following is the correct calculation of project Delta's IRR? Year Cash Flow Year 1 $275,000 Year 2 $400,000 Year 3 $500,000 Year 4 $400,000 O 1.86% 0 1.77% O 1.95% O 1.67% If this is an independent project, the IRR method states that the firm should reject project Delta accept project Delta If the project's cost of capital were to increase, how would that affect the IRR? O The IRR would not change. O The IRR would decrease. The IRR would increase
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