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Once again consider the investment project from Queston 7 where a company is considering a potential investment project that requires an initial investment of $'|
Once again consider the investment project from Queston 7 where a company is considering a potential investment project that requires an initial investment of $'| 2,800 now, but that is expected to generate free cash flows of $2,300, $3,400 and $4,800 over the next three years. Assume an appropriate discount rate is 9%. (a) Calculate the net present value (NPV) of this project. (Hint: You can use the same discounted cash ows you calculated in Question 7.) Should the project be accepted or rejected? Explain why. (4 marks) (b) lfyou were to calculate the internal rate of return (IRR) for this project, would it be less than, equal to, or greater than 9%? Explain your answer. (2 marks) (Include enough working to show you understand the calculations.)
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