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#analyst-notes #cfa-level-1 #corporate-finance #reading-35-capital-budgeting #study-session-10
IRR does provide "safety margin" information.
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Subject 3. Investment Decision Criteria
he same accept or reject decisions. Decision rules: The higher the IRR, the better. Define the hurdle rate, which typically is the cost of capital. Reject if IRR is less than or equal to the hurdle rate. <span>IRR does provide "safety margin" information. Calculate Project A's and B's IRR. Project A: -1000 + 750/(1 + IRR) 1 + 350/(1+IRR) 2 + 150/(1+IRR) 3 + 50/(1+IRR) 4 = 0 Since it is difficult


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