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A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Ye

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Answer #1

Let irr be x%
At irr,present value of inflows=present value of outflows.

28900=12900/1.0x+15900/1.0x^2+11900/1.0x^3

Hence x=irr=19.51%(Approx).

Hence since irr is greater than required return;project must be accepted.

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