Minimum annual cash inflow that firm should accept

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IRR, investment life, and cash inflows. Oak Enterprises accepts projects earning more than the firm's 11% cost of capital. Oak is currently considering a 13-year project that provides annual cash inflows of $20,000 and requires an initial investment of $179,300. (Note: All amounts are after taxes.)

a. Determine the IRR of this project. Is it acceptable?

b. Assuming that the cash inflows continue to be $20,000 per year, how many additional years would the flows have to continue to make the project acceptable? (that is, to make it have an IRR of 11%)?

c. With the given life, initial investment, and cost of capital, what is the minimum annual cash inflow that the firm should accept?

Reference no: EM131893644

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