Solved: When is the irr rule unreliable, Finance Basics

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When is the irr rule unreliable

Problem:

Consider an investment that costs $100,000 and had a cash inflow of $25,000 every year for 5 years. The required return is 9% and required payback is 4 years.

Wwhat is the payback period?
What is the discounted payback period?
What is the NPV?
What is the IRR?

Should we accept this project?
What decision rule should be the primany decision method?
When is the IRR rule unreliable?

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