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Suppose that you are checking the evaluation results of a capital budgeting project based on NPV, IRR and profitability index. The project requires the initial
Suppose that you are checking the evaluation results of a capital budgeting project based on NPV, IRR and profitability index. The project requires the initial investment and then generates positive cash flows over the life of the project. The results show as follows: NPV = $230,000; IRR = 12.5%, Profitability index = 1.2. If the required rate of return of the project is assumed to be 15%, which result is possibly incorrect and why?
2. [5 Points] Suppose that you are checking the evaluation results of a capital budgeting project based on NPV, IRR and profitability index. The project requires the initial investment and then generates positive cash flows over the life of the project. The results show as follows: NPV = $230,000; IRR = 12.5%, Profitability index = 1.2. If the required rate of return of the project is assumed to be 15%, which result is possibly incorrect and whyStep by Step Solution
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