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1 7. Calculating IRR (LO5) A firm evaluates all of its projects by applying the IRR rule. If the required return is 16 percen

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Answer #1
Year Cash flow (in $) PV factor @16% Present value(in $)
0 -28000 1 -28000
1 12000 0.8621 10345.2
2 15000 0.7432 11148
3 11000 0.6407 7047.7
NPV 540.9

The Net Preset Value of the project is positive and thus project should be accepted.

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