Question: The finance manager is considering a project that…
The finance manager is considering a project that has the following forecasted Free Cash Flows:
Years Cash Flow
0 -$25,000
1 $7,000
2 $13,000
3 $8,000
4 $12,000
5 $10,000
Assuming the WACC is 15% and a tax rate of 40%, do the following:
Compute the Internal Rate of Return (IRR) of the project and interpret the results.
Based on the IRR, should this project be accepted or rejected? Explain.
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