A company is considering an investment that requires an immediate investment of $500,000 and an additional investment
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Question:
A company is considering an investment that requires an immediate investment of $500,000 and an additional investment of $175,000 in year 3. The investment will generate annual profits of $180,000 for five years, starting from year 2.
a. Calculate the IRR for this investment.
%
b. If the cost of capital is 8.5%, should the company undertake the investment?
Yes
No
Related Book For
Cornerstones of Managerial Accounting
ISBN: 978-0324660135
3rd Edition
Authors: Mowen, Hansen, Heitger
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