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Business, 24.04.2020 15:18 joeduf

Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $ 5.16 million per year. Your upfront setup costs to be ready to produce the part would be $ 8.01 million. Your discount rate for this contract is 8.5 %.
(a) What is the IRR?
(b) The NPV is $ 5.16 million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule?

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