A proposed project will require the immediate investment of $50,000 and is estimated to have year-end revenues and costs as follows: Year Revenue Costs 1 2 3 4 5 $ 75,000 90,000 100,000 95,000 60,000 $ 60,000 77,500 75,000 80,000 47,500 An additional investment of $20,000 will be required at the end of the second year. The project would terminate at the end of the 5th year, and the assets are estimated to have a salvage value of $25,000 at the time. Solve for the IRR of the project by PW using 15% and 16% rates. A. 15.68% B. 15.28% C. 15.88% D. 15.48%
A proposed project will require the immediate investment of $50,000 and is estimated to have year-end revenues and costs as follows: Year Revenue Costs 1 2 3 4 5 $ 75,000 90,000 100,000 95,000 60,000 $ 60,000 77,500 75,000 80,000 47,500 An additional investment of $20,000 will be required at the end of the second year. The project would terminate at the end of the 5th year, and the assets are estimated to have a salvage value of $25,000 at the time. Solve for the IRR of the project by PW using 15% and 16% rates. A. 15.68% B. 15.28% C. 15.88% D. 15.48%
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
A proposed project will require the immediate investment of $50,000 and is estimated to have year-end revenues and costs as follows:
|
Year |
Revenue |
Costs |
|
1 2 3 4 5 |
$ 75,000 90,000 100,000 95,000 60,000 |
$ 60,000 77,500 75,000 80,000 47,500 |
An additional investment of $20,000 will be required at the end of the second year. The project would terminate at the end of the 5th year, and the assets are estimated to have a salvage value of $25,000 at the time. Solve for the
|
A. |
15.68% |
|
|
B. |
15.28% |
|
|
C. |
15.88% |
|
|
D. |
15.48% |
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