Assume a company can buy a new facility that will cost$3,250,000 and is expected to generate $855,000 ayear in revenue for the first three years and $425,000 ayear in revenue for the next three years. Thecompany's weighted cost of capital (WACC) is 6.5% peryear. What is the IRR for this investment?5.38%5.88%© 6.00%

Step 1:Given cash flows areInitial cost = −3,250,000CF1 to CF3 = 855,000CF4 to CF6 =…

Answered: Assume a company can buy a new facility…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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