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Project X Has a Cost of $750 and a Three

question 154

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Project X has a cost of $750 and a three year annual cash flow of $350 per year. Project Y has a cost of $500 and a three year annual cash flow of $300, $225 and $200. Given this information, calculate the IRR cross-over rate.


Definitions:

Capital

The financial assets or resources that businesses and individuals use to invest, produce goods and services, including buildings, machinery, and equipment.

Output

The quantity of goods or services produced in a given period by a firm, industry, or country.

Unit of Labor

A measurement in economics referring to one hour of work or its equivalent output by a worker.

Unit of Capital

The smallest divisible amount of capital that can be invested in or allocated to a project or investment.

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