Question
You have been asked to evaluate the following project: Your insurance company will receive cash flows of $2.5 million/year for 5 years. In return, you
You have been asked to evaluate the following project: Your insurance company will receive cash flows of $2.5 million/year for 5 years. In return, you will make a payment of $16 million in 9 years.
a. What is the IRR of this project?
b. Assuming an 8% discount rate, does the IRR rule tell you to accept or reject this project?
c. What is the NPV of this investment?
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Financial Markets and Institutions
Authors: Anthony Saunders, Marcia Cornett
6th edition
9780077641849, 77861663, 77641841, 978-0077861667
