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Integrative-Multiple IRRs Froogle Enterprises is evaluating an unusual investment project. What makes the project unusual is the stream of cash inflows and outflows shown in
Integrative-Multiple IRRs Froogle Enterprises is evaluating an unusual investment project. What makes the project unusual is the stream of cash inflows and outflows shown in the following table: a. Why is it difficult to calculate the payback period for this project? b. Calculate the investment's net present value at each of the following discount rates: 0%,5%,10%,15%,20%,25%,30%,35%. c. What does your answer to part b tell you about this project's IRR ? d. Should Froogle invest in this project if its cost of capital is 5% ? What if the cost of capital is 15% ? e. In general, when faced with a project like this, how should a firm decide whether to invest in the project or reject it? Data table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.)
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