Finance

The IRR is an unpopular capital budgeting decision model because even

The IRR is an unpopular capital budgeting decision model because even with the advent of calculators and spreadsheets, the cumbersome calculation remains. Indicate whether the statement is true or false.     ANSWER Answer: FALSE Explanation: The IRR is very popular because with the advent of calculators and spreadsheets the cumbersome calculation is a thing […]

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Date: September 19th, 2020

Which of the following in NOT a potential problem suffered by the IRR

Which of the following in NOT a potential problem suffered by the IRR method of capital budgeting? A) Multiple IRRs B) Disagreement with the NPV as to whether a project with ordinary cash flows is profitable or not C) Incorporates the IRR as the reinvestment rate for the future cash flows D) Comparing mutually exclusive […]

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Date: September 19th, 2020

Spotify, Inc. is considering a five-year project that has an initial o

Spotify, Inc. is considering a five-year project that has an initial outlay or cost of $22,000. The future cash inflows from its project for years 1, 2, 3, 4 and 5 are $15,000, $15,000, $15,000, $15,000 and -$41,000, respectively. Compute both IRRs. Given these IRRs, compute the two NPVs. If Spotify’s true cost of borrowing […]

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Date: September 19th, 2020