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You are considering an investment in a clothes distributer. The company needs 100,000 today and expects to repay you $124,000 in a year from now.

You are considering an investment in a clothes distributer. The company needs 100,000 today and expects to repay you $124,000 in a year from now. What is the IRR of this investment opportunity? Given the riskiness of the investment opportunity, your cost of capital is 20%.

What does the IRR rule say about whether you should invest?

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