TBC Bank is considering purchasing a new building for newly opened branch in region. Required rate of return for the project is 10 percent, and it will generate the following cash flows; cash inflows are estimated as annual savings from rent, which are changed as rent is quoted in foreign currency and with increasing operations in the last 2 years, the bank would need additional space. What do you think of this project regarding IRR decision rule?

Transcribed Image Text:

Initial outlay FCF in year 1 FCF in year 2 FCF in year 3 FCF in year 4 FCF in year 5 FCF in year 6 -$200,000 35,000 38,000 40,000 41,000 85,000 86,000