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
$5.09
million per year. Your upfront setup costs to be ready to produce the part would be
$8.08
million. Your discount rate for this contract is
8.1%.
a. What is the IRR?
b. The NPV is
$5.01
million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule?
a. What is the IRR?
The IRR is
nothing%.
(Round to two decimal places.)b. The NPV is
$5.01
million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule?(Select from the drop-down menu.)The IRR rule
agrees
doesn't agree
with the NPV rule.
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