A firm evaluates all of its projects by applying the IRR rule. If the required return...

A firm evaluates all of its projects by applying the IRR rule. If the required return is 14 percent, should the firm accept the following project?

Year	Cash Flow
0	?$26,000
1	11,000
2	14,000
3	10,000

5.) For the cash flows in the previous problem, suppose the firm uses the NPV decision rule. At a required return of 11 percent, should the firm accept this project? What if the required return is 24 percent?

Solutions

Expert Solution

It should reject the project the project at the Required Return on 24%, as it has negative NPV.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

A firm evaluates all of its projects by applying the IRR rule. If the required return...

A firm evaluates all of its projects by applying the IRR rule. If the required return is 14 percent, should the firm accept the following project? Year Cash Flow 0 -$30,000 1 16,000 2 20,000 3 15,000

A firm evaluates all of its projects by applying the IRR rule. If the required returns...

A firm evaluates all of its projects by applying the IRR rule. If the required returns is 14%, should the firm accept the following project? Year Cash flow 0. -$26000 1. $11000 2. $14000 3. $10000

A firm evaluates all of its projects by applying the IRR rule. A project under consideration...

A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows? YearCash Flow0–$28,000 1 -12,000 2 -15,000 3 -11,000

A firm evaluates all of its projects by applying the IRR rule. A project under consideration...

A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 27,100 1 11,100 2 14,100 3 10,100 1．If the required return is 15 percent, what is the IRR for this project? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) IRR % ２．Should the firm accept the project? No Yes

A firm evaluates all of its projects by applying the IRR rule. A project under consideration...

A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 27,100 1 11,100 2 14,100 3 10,100 1.If the required return is 15 percent, what is the IRR for this project? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) IRR % 2. Should the firm accept the project? Yes No

A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows:

A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 28,800 1 12,800 2 15,800 3 11,800 If the required return is 13 percent, what is the IRR for this project? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

A firm evaluates all of its projects by applying the NPV decision rule. A project under...

A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 27,400 1 11,400 2 14,400 3 10,400 What is the NPV for the project if the required return is 12 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV $ At a required return of 12 percent, should the firm accept...

A firm evaluates all of its projects by applying the NPV decision rule. A project under...

A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 28,600 1 12,600 2 15,600 3 11,600 What is the NPV for the project if the required return is 11 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) At a required return of 11 percent, should the firm accept this project? Yes No...

1. A firm evaluates all of its projects by applying the NPV decision rule. A project...

1. A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flow 0 $ -34,000 1 15,000 2 17,000 3 13,000 If the NPV = $1.27, should the firm accept this project? A) Yes B) No 2. If the NPV of the above project is as stated above, how much value does it add to the firm, compared to investing in an Opportunity Cost Investment project?...

A firm evaluates all of its projects by applying the NPV decision rule. A project under...

A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flow 0 $ -27,700 1 11,700 2 14,700 3 10,700 What is the NPV for the project if the required return is 12 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) At a required return of 12 percent, should the firm accept this project? Yes...

Subjects