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you have 3 projects with the followinf cashflows 0 -150 1 20 2 40 3 60 4 80 is the IRR rule reliable? Wallraction of
you have 3 projects with the followinf cashflows
Wallraction of the last payment on the mortgage is interest? e. If you were able to borrow from (and lend to your bank at 5% (with annual interest pay what would be the NPV of the mortgage? 2. You have 3 projects with the following cash flows: Project Year 1 2 3 4 -15020406080 - 13000 0 9000 -8000 21 40 60 80 -245 a. What is the IRR rule? b. For which of these projects is the IRR rule reliable? c. Estimate the IRR for each project (to the nearest 1%). d. What is the NPV of each project if the cost of capital is 5%P 20%P 50%? e. If the IRR rule is not reliable for any of these projects, explain what feature of the cash flows makes it unreliable. A manufacturer of electric scooters currently produces 280,000 units a year and expects output levels remain steady in the future. It buys wheels from an outside supplier at a price of 20 a wheel. The plar manager believes that it would be cheaper to make these wheels rather than buy them. Direct in-house production costs are estimated to be only 15 per wheel. The necessary machinery would cost 1. The investment could be depreciated to zero for tax 3 0 -150
1 20
2 40
3 60
4 80
is the IRR rule reliable?
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