Question content area top Part 1 Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be $ 5.00 million per year. Your upfront setup costs to be ready to produce the part would be $ 8.00 million. Your discount rate for this contract is 8.0 %. a. What is the IRR? b. The NPV is $ 4.89 million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule?

Question content area top Part 1 Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be $ 5.00 million per year. Your upfront setup costs to be ready to produce the part would be $ 8.00 million. Your discount rate for this contract is 8.0 %. a. What is the IRR? b. The NPV is $ 4.89 million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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