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NPV & IRR

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1) Your firm has an opportunity to make an investment of $50,000. Its cost of capital is 12 percent. It expects after-tax cash flows (including the tax shield from depreciation) for the next 5 years to be as follows:

Year 1 $10,000
Year 2 20,000
Year 3 30,000
Year 4 20,000
Year 5 5,000

a. Calculate the NPV
b. Calculate the IRR (to the nearest percent)
c. Would you accept this project?

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NPV & IRR are calculated.

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1) Your firm has an opportunity to make an investment of $50,000. Its cost of capital is 12 percent. It expects after-tax cash flows (including the tax ...

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