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Initial Outlay: $4,000,000Year 1: $2,000,000Year 2: $2,500,000Year 3: -$500,000Requirements:Determine the IRR.Calculate the NPV if the...

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Question

Accounting

  • Initial Outlay: $4,000,000
  • Year 1: $2,000,000
  • Year 2: $2,500,000
  • Year 3: -$500,000

Requirements:

  1. Determine the IRR.
  2. Calculate the NPV if the discount rate is 12%.
  3. If the firm's cost of capital is 12%, should the firm undertake the project?
  4. Calculate the profitability index (PI).

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