Calculating IRR
A firm evaluates all of its projects by applying the IRR rule. If the required return is 14 percent, should the firm accept the following project?
Year Cash Flow
0 -26,000
1 11,000
2 14,000
3 10,000
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 is 24 percent?