Options are:
10%
12%
8%
6%
Please help me out
At IRR, NPV = 0
IRR = ra + [ NPVa * (rb - ra) / ( NPVa - NPVb)]
Where, ra = lower discount rate choosen
rb = higher discount rate choosen
NPVa = Net present value at ra
NPVb = Net present value at rb
As per computation in the attachment,
IRR = 8% + [ 1500.8 * (14%-8%) / (1500.8 - (-2609.6))]
= 8% + [ 1500.8 * 6% / (1500.8+2609.6)]
= 8% + [ 9004.8% / 4110.4]
= 8% + 2.19%
IRR = 10%
At IRR = 10%, NPV = 0.
Options are: 10% 12% 8% 6% Please help me out Reece Corporation is considering the purchase...
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