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Katena32 [7]
3 years ago
6

Warr Company is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's pr

ojected IRR can be less than the WACC or negative, in both cases it will be rejected. Year 0 1 2 3 4 Cash flows -$1,300 $450 $450 $450 $450 14.16% 14.42% 15.31% 15.84% 16.23%
Business
1 answer:
BartSMP [9]3 years ago
4 0

Answer:

Option B, IRR is 14.42%

Explanation:

The IRR is the rate of return that equates the cost of the project to the present value of cash flows receivable from the project in future.

Using an excel approach, the formula formula IRR is given as:

=irr(values)

The values in this case are

-$1300 in  year 0

$450 in year 1

$450 in year two

$450 in year 3

$450 in year 4

The irr gives 14.42% as shown in the spreadsheet attached

The cost of the investment of the investment project of $1300 equals the present values of its cash flows at 14.42% rate of return

Download xlsx
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kvv77 [185]

Answer:

The correct answer is letter "E": Strategic.

Explanation:

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Component lifestyle -

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5 0
3 years ago
For a levered firm, flotation costs should
KengaRu [80]

Answer:

The answer is option B. For a levered firm, flotation costs should <u>be spread over the life of a project, thereby reducing the cash flows for each year of the project.</u>

Explanation:

When a company’s securities are listed on a public exchange, there is a general saying that securities are floated on the exchange. That is how the name flotation costs came about.

Flotation is actually the costs  incurred by a company in issuing its securities to public.  it is also called issuance costs.

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