Bohrer Mining, Inc., is trying to evaluate a project with the following cash flows: YEAR.................................................CASH FLOW 0....................................................$67,000,000
Question:
Bohrer Mining, Inc., is trying to evaluate a project with the following cash flows:
YEAR.................................................CASH FLOW
0....................................................−$67,000,000
1........................................................97,000,000
2......................................................−13,000,000
a. If the project has a required return of 10 percent, should it accept this project? Why?
b. Compute the IRR for this project. How many IRRs are there? If you apply the IRR decision rule, should you accept the project or not? What’s going on here?
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a The equation for the NPV of the project is NPV 67000000 9700000011 1300000011 2 1043801653 The NPV is greater than 0 so we would accept the project b The equation for the IRR of the project is 0 67000000 970000001 ...View the full answer
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Related Book For 
Corporate Finance Core Principles and Applications
ISBN: 978-1259289903
5th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
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