Consider a project with the following cash flows and a firm with a 15 percent cost of capital.
|
End of Year
|
Cash Flow
|
|
0
|
-$ 20,000
|
|
1
|
50,000
|
|
2
|
-10,000
|
a. What are the two IRRs associated with this cash flow stream?
b. If the firm's cost of capital falls between the two IRR values calculated in part (a), should it accept or reject the project?