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Question: (NPV with varying required rates of return) Strada Company is considering purchasing new machinery for its business line. This investment required an initial outlay of $200,000 and will generate free cash inflow of $20,000 per year for 15 years.

a. If the required rate of return is 12 percent, what is the project's NPV?

b. If the required rate of return is 16 percent, what is the project's NPV?

c. Would the project be accepted under part (a) or (b)?

d. Calculate the project's IRR.

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Category:- Basic Finance
Reference No.:- M92297282

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