Question
Suppose that a manager is given a new project with the following cash flows: Year Cash flow ($ million) 0 -100 1 30 2 40
Suppose that a manager is given a new project with the following cash flows:
Year | Cash flow ($ million) |
0 | -100 |
1 | 30 |
2 | 40 |
3 | 50 |
4 | 50 |
What is the internal rate of return of this project? According to the IRR rule, should the manager undertake this project?
Group of answer choices
IRR is 15.3%. The manager needs to undertake this project because the IRR is higher than the discount rate.
IRR is 15.3%. The manager should not undertake this project because the IRR is higher than the discount rate.
IRR is 22.8%. The manager needs to undertake this project because the IRR is higher than the discount rate.
IRR is 22.8%. The manager should not undertake this project because the IRR is higher than the discount rate.
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