Mode Publishing is considering a new printing facility that will involve a large
ID: 2623993 • Letter: M
Question
Mode Publishing is considering a new printing facility that will involve a large initial investment and then result in a series of positive cash flows for six years. The estimated cash flows are as follows:
Initial Investment ?
Cash Flow in Year 1 $250 million
Cash Flow in Year 2 $275 million
Cash Flow in Year 3 $300 million
Cash Flow in Year 4 $325 million
Cash Flow in Year 5 $350 million
Cash Flow in Year 6 $350 million
What will be this project's Internal Rate of Return, if the project is expected to have a payback period of 4.75 years?
Answer
9.80%
8.02%
6.27%
7.79%
9.80%
8.02%
6.27%
7.79%
Explanation / Answer
8.02%