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Should project be accepted based on discount rate and why

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Reference no: EM132600472

Question 1: An investment has an initial cost of $400,000. It is a four-year project with expected cash flows as shown below. If you require a 15.5% IRR on the project, should you proceed? Why or why not?

Year                           1                 2                3               4

Net income               $120,000    $124,600      $138,700         $130,000

Question 2: An investment has an initial cost of $200,000 and a life of four years. It is expected to generate net cash flows as shown below. Should this project be accepted based on a discount rate of 8%? Why or why not?

Year                         1             2                 3               4

Cash Flow              $28,000   $70,600        $88,700     $92,400

Reference no: EM132600472

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