Brief Exercise 24-8 Viera Corporation is considering investing in a new facility

Question

Brief Exercise 24-8 Viera Corporation is considering investing in a new facility. The estimated cost of the facility Is $1,789,814. It will be used for 12 years, then sold for $710,000. The facility will generate annual cash inflows of $350,000 and will need new annual cash outflows of $150,000. The company has a required rate of return of 7%. ClickheretowenPy table. $350,000 hee int er air te o%. Curkheretoytecasyta Calculate the Internal rate of return on this project. (Rouhd answer to 0 decimal place, e.g. 125.) Internal rate of return is Whether the project should be accepted. The project e be accepted Click If you would Iike to Show Work for this question: Open Show Work

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We need to calculate IRR (rate) at which cost=present value of cash inflows over the life of the project. 1789914=710000/(1+r)^12+pv(r,12,-350000+150000) solving for r will give r=IRR=8% IRR 8% The project should be accepted as IRR>required rate of return

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