Cement Inc. is considering an investment opportunity that requires an initial outlay equal to $575,000....
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Cement Inc. is considering an investment opportunity that requires an initial outlay equal to $575,000. In years 1 and 2 the net cash flows are expected to equal $500,000. The required rate of return is 25% p.a. 1 Given that the Cement Inc.s criterion whether to invest or not is the projects internal rate of return (IRR), should the firms managers invest in this project? Is the IRR criterion the correct decision rule in this case?
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