Can you explain why the relationship between CCA and IRR is positive? How could both...
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Can you explain why the relationship between CCA and IRR is positive? How could both NPV and IRR be both positive? Are they positively related?
2. Precise Corp. is considering the acquisition of a new CNC machine. The NPV of this acquisition project is $2.5 million and the project has an IRR of 14%. To calculate those numbers, you assumed a CCA rate of 30%. It turns out that you were wrong regarding the CCA rate, and that the correct CCA rate that applies to this type of machine is 40%, what would happen to the NPV and the IRR of the project ifyou used in your calculations a CCA rate of 40% (instead of 30%)? a) NPV decreases, IRR decreases b) NPV decreases, IRR increases c) NPV increases, IRR decreases d) NPV increases, IRR increases e) NPV does not change, IRR does not change
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