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Should the following project be accepted if the cost of capital is 12%? Initial Investment is...

Should the following project be accepted if the cost of capital is 12%? Initial Investment is $50,000. what would the internal rate of return be?

Cash flows

Year1 25000

Year2 35000

Year3 55000

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Answer #1

We have to compute the NPV of the project using 12% rate 4 IV=111个11 PVIF @ Cash flow 12% present value 0 50000 1.0000 (50,000.00) 22,321.43 27,901.79 39,147.91 39,371.13 Year 1 25000 0.8929 2 35000 0.7972 3 55000 0.7118 10 NPV NPV is positive therefore project should be accepted 12 13 15 16 17 Computation of IRR Formula used 47 .76% IRR(D6:D9)

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