Your factory has been offered a contract to produce a part for a new printer

Accounting Apr 08, 2021

Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be $5.07 million per year. Your upfront setup costs to be ready to produce the part would be $8.08 million. Your discount rate for this contract is 7.8%. a. What is the IRR? b. The NPV is 55.03 million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule?

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