Your factory has been offered a contract to produce a part for a new printer. The contract
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Question:
Your factory has been offered a contract to produce a part for a new printer. The contract would last for years and your cash flows from the contract would be $ million per year. Your upfront setup costs to be ready to produce the part would be $ million. Your discount rate for this contract is
a What is the IRR?
b The NPV is $million which is positive, so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule?
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