Mathematics High School

Is considering starting a new factory. if the required rate of return for this factory is 14.25 percent. based solely on the internal rate of return rule, should nadia accept the investment?

Answers

Answer 1

The internal rate of return (IRR) is a financial metric used to evaluate the profitability of an investment project. It is the discount rate that makes the net present value (NPV) of the project equal to zero. In other words, it is the rate at which the present value of the cash inflows equals the present value of the cash outflows.



To determine whether Nadia should accept the investment in the new factory, we need to compare the IRR of the project with the required rate of return, which is 14.25 percent in this case.



If the IRR is greater than or equal to the required rate of return, then Nadia should accept the investment. This means that the project is expected to generate a return that is at least as high as the required rate of return.


If the IRR is less than the required rate of return, then Nadia should reject the investment. This suggests that the project is not expected to generate a return that is high enough to meet the required rate of return.


So, to determine whether Nadia should accept the investment, we need to calculate the IRR of the project and compare it with the required rate of return. If the IRR is greater than or equal to 14.25 percent, then Nadia should accept the investment. If the IRR is less than 14.25 percent, then Nadia should reject the investment.

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Related Questions

Suppose that in a particular sample, the mean is 50 and the standard deviation is 10. What is the z score associated with a raw score of 68?

Answers

The z-score associated with a raw score of 68 is 1.8.

Given mean = 50 and standard deviation = 10.

Z-score is also known as standard score gives us an idea of how far a data point is from the mean. It indicates how many standard deviations an element is from the mean. Hence, Z-Score is measured in terms of standard deviation from the mean.

The formula for calculating the z-score is given as

z = (X - μ) / σ

where X is the raw score, μ is the mean and σ is the standard deviation.

In this case, the raw score is X = 68.

Substituting the given values in the formula, we get

z = (68 - 50) / 10

z = 18 / 10

z = 1.8

Therefore, the z-score associated with a raw score of 68 is 1.8.

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