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  3. the intemai rate of return (irr) refers to the com

The intemai rate of return (IRR) refers to the compound annual rate of return that...

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Accounting

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The intemai rate of return (IRR) refers to the compound annual rate of return that a project generatos based on its up-front cost and aubsequent 0 flow5. Consider this case: Falcon Freight is evaluating a proposed capital budgeting project (project Deita) that will require an initial investment of $1,500,000. Falcon Freight has been basing capital budgeting decislons on a project's NPV; however, its new CFO wants to start using the IRR method for capital budgeting decisions. The CFO says that the IRR is a better method because percentages and returns are easier to understand and to compare to required returns. Falcon Freight's WACC is 9%6, and project Delta has the same risk as the firm's average project. The project is expected to generote the following net cash flows: Which of the following is the correct calculation of project Delta's IRR? If this is an independent project, the IRR method states that the firm should If the project's cost of capital were to increase, how would that affect the IRR? The IRR would decrease. The IRR would not change. The IRR would increase

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