Fast Machines, Inc., has a project with the following cash flows. The company evaluates all projects...

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Fast Machines, Inc., has a project with the following cash flows. The company evaluates all projects by applying the IRR rule

business finance

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Answer 1

Answer #1

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

28700=12700/1.0x+15700/1.0x^2+11700/1.0x^3

Hence x=irr=19.00%(Approx)

Hence since irr is greater than interest rate;project must be accepted.

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Answer 2

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