If Amazon is considering investing $10 billion in new warehouses, and the NPV is calculated to...
If Amazon is considering investing $10 billion in new warehouses, and the NPV is calculated to be +$1, and the WACC is 6%, what is your approximate estimate for the IRR? (No calculations needed.)
Homework Answers
IRR is the rate at which NPV = 0
If NPV = 0, then IRR = WACC
If NPV > 0, then IRR > WACC
NPV = +$1
NPV is just one dollar above 0. So, the IRR is just above WACC.
The approximate estimate for the IRR ~ 6%
(Just above 6%. Approximately 6%)
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