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Please solve all of the questions. IRR, investment life, and cash inflows Oak Enterprises accepts projects earning more than the firm's 11% cost of capital.
Please solve all of the questions.
IRR, investment life, and cash inflows Oak Enterprises accepts projects earning more than the firm's 11% cost of capital. Oak is currently considering a 12-year project that provides annual cash inflows of $20,000 and requires an initial investment of $161,800. a. Determine the IRR of this project. Is it acceptable? b. Assuming that the cash inflows continue to be $20,000 per year, how many additional years would the flows have to continue to make the project acceptable (that is, to make it have an IRR of 11%)? c. With the given life, an initial investment of $161,800, and cost of capital of 11%, what is the minimum annual cash inflow the investment would have to provide in order for this project to make sense for Oak's shareholders? a. The project's IRR is %. (Round to two decimal places.) Is the project acceptable? (Select the best answer below.) O A. No OB. Yes b. Assuming that the cash inflows continue to be $20,000 per year, the number of additional years the flows would have to continue to make the project acceptable at the 11% discount rate is additional years. (Round to two decimal places.) c. With the given life, initial investment, and cost of capital, the minimum annual cash inflow that the firm should accept is (Round to the nearest cent.)Step by Step Solution
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