Question: A firm evaluates all of its projects by applying the IRR rule. If the reguired return is 14 percent, should the firm accept the following project?
For the cash flows in the previous problem, suppose the firm uses the NPV decision rule. At a reguired return of 11 percent, should the firm accept this project? What if required return is 25 percent?
Year Cash Flow
0 $(28,000)
1 $12,000
2 $15,000
3 $11,000