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You are considering an investment with the following cash flows. If the required rate of return for this investment is 13.5%, should you accept it
You are considering an investment with the following cash flows. If the required rate of return for this investment is 13.5%, should you accept it based solely on the internal rate of return rule? Why or why not?
Year Cash Flow
0 -12,000
1 5,500
2 8,000
3 -1,500
No; because the IRR is a negative rate of return | ||
Yes; because the IRR is a positive rate of return | ||
You can not apply the IRR rule in this case because there are multiple IRRs. | ||
No; because the IRR is less than the required return |
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