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PART FOUR Capital Budgeting

8. Calculating NPV 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 was 21 percent?

9. Calculating NPV and IRR A project that provides annual cash flows of $1,200 for nine years costs $6,000 today. Is this a good project if the required return is 8 percent? What if it's 24 percent? At what discount rate would you be indifferent between accepting the project and rejecting it?

10. Calculating IRR What is the IRR of the following set of cash flows?

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