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Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of
Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistic for the project are three and three and a half years, respectively.
Time Years 0123456
Cash Flow-100,00030,000 50,00045,000250003500010000
Use the IRR decision rule to evaluate this project; should it be accepted or rejected? Calculate the IRR
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