Question
Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash
Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be $ 5.07
million per year. Your upfront setup costs to be ready to produce the part would be $ 7.93
million. Your discount rate for this contract is 8.2 %
a. What is the IRR?
b. The NPV is $5.09 million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule?
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Introduction To Finance Financial Management And Investment Management
Authors: Pamela P. Drake, Frank J. Fabozzi, Francesco A. Fabozzi
1st Edition
9811239657, 978-9811239656
