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 $8.09 million. Your discount rate for this contract is 8.1%.
a. What is the IRR?
b. The NPV is $5.00 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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Securitisation Derivatives A Practioner's Handbook
Authors: Mark Aarons, Vlad Ender, Andrew Wilkinson
1st Edition
1119532272, 978-1119532279
