Viera AG is considering investing in a new facility. The estimated cost of the facility is 2,045,000.
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Viera AG is considering investing in a new facility. The estimated cost of the facility is €2,045,000. It will be used for 12 years, then sold for €716,000. The facility will generate annual cash inflows of €400,000 and will need new annual cash outflows of €150,000. The company has a required rate of return of 7%. Calculate the internal rate of return on this project, and discuss whether the project should be accepted.
Internal Rate of ReturnInternal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment...
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When net annual cash flows are expected to be equal the internal rate of return can be approximated ...View the full answer
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Related Book For 
Accounting Principles
ISBN: 978-1119419617
IFRS global edition
Authors: Paul D Kimmel, Donald E Kieso Jerry J Weygandt
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