Question
Trilever is planning to establish a new factor overseas. The project requires an initial investment of $15 million. Management intends to run this factory for
Trilever is planning to establish a new factor overseas. The project requires an initial investment of $15 million. Management intends to run this factory for 6 years and then sell it to a local entity. Trilevers finance department has estimated the following yearly cash flows and an opportunity cost of capital of 19%:
| Year | Cash Flow $ |
| 0 | -15,000,000 |
| 1 | 4,000,000 |
| 2 | 4,000,000 |
| 3 | 4,000,000 |
| 4 | 4,000,000 |
| 5 | 4,000,000 |
| 6 | 7,000,000 |
- Calculate the IRR of this project
- Make a recommendation to the CFO concerning whether to undertake this project (use an IF statement to set up your decision rule)
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Personal Finance
Authors: Jeff Madura
3rd Edition
0321357973, 978-0321357977
