Suppose you have an investment that costs $80,000 at the beginning of the project, and it generates $30,000 a year for four years in positive cash flows
The cost of capital is 12%. The IRR of the project is 18.45% and the NPV is about $11,120. The IRR model assumes that at the end of the first year you can invest the $30,000 at ________.
A) 18.45%
B) 12.00%
C) a rate less than the cost of capital
D) a rate greater than the IRR
Answer: A
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