Year 0 Cash Flow = +$25,000 (assume only 1 change in signs in future cash flows) Project IRR = 4.5% Market Rate = 6.0% Without knowing anything more, can this project be accepted without reviewing NPV? In other words, can you use the short-cut of comparing IRR vs. the market rate? Why or why not? Explain
Year 0 Cash Flow = +$25,000 (assume only 1 change in signs in future cash flows) Project IRR = 4.5% Market Rate = 6.0% Without knowing anything more, can this project be accepted without reviewing NPV? In other words, can you use the short-cut of comparing IRR vs. the market rate? Why or why not? Explain
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
Related questions
Question
Year 0 Cash Flow = +$25,000 (assume only 1 change in signs in future cash flows)
Project IRR = 4.5%
Market Rate = 6.0%
Without knowing anything more, can this project be accepted without reviewing NPV? In other words, can you use the short-cut of comparing IRR vs. the market rate? Why or why not? Explain
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