A Local Company Requires All Capital Investments to Generate a Minimum

question 3

Essay

A local company requires all capital investments to generate a minimum internal rate of return of 14 per cent.The company is currently considering an investment that is expected to generate annual cash inflows of $40 000 for 5 years.The cost of this investment is $150 000.
Required: Would you recommend the company make this investment? Why or why not? Show computations and ignore income taxes.

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