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You are considering an investment in a clothes distributor. The company needs $ 1 0 0 , 0 0 0 today and expects to repay

You are considering an investment in a clothes distributor. The company needs

100, 000

today and expects to repay you $

122, 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

12 % .

What does the IRR rule say about whether you should

invest?

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