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Net Present Value and Internal Rate of Return

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A new computer system will require an initial outlay of $20,000 but it will increase the firm's cash flows by $4,000 a year for each of the next 8 years.

Is the system worth installing if the required rate of return is 9 percent? What if it is 14 percent?

How high can the discount rate be before you would reject the project?

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Solution Summary

NPV and IRR are investigated.

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