Construction of a New Plant: Internal Rate of Return
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As the capital budgeting director for my company, I am evaluating construction of a new plant. The plant has a net cost of $5 million in Year 0 (today), and it will provide net cash flows of $1 million at the end of Year 1, $1.5 million at the end of Year 2, and $2 million at the end of Years 3 through 5. Within what range is the plant's IRR?
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The range of a new plant's internal rate of return is calculated.
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