Peri Corporation is considering an investment opportunity with the following expected net cash inflows
Year 1, $230,000; Year 2, $370,000; Year 3, $360,000. The company uses a discount rate of 13%, and the initial cost of the investment is $720,000.
Present Value of $1:
10% 11% 12% 13% 14% 15%
1 0.909 0.901 0.893 0.885 0.877 0.870
2 0.826 0.812 0.797 0.783 0.769 0.756
3 0.751 0.731 0.712 0.693 0.675 0.658
4 0.683 0.659 0.636 0.613 0.592 0.572
5 0.621 0.593 0.567 0.543 0.519 0.497
The IRR of the project will be ________.
A) less than 13%
B) between 13% and 14%
C) between 14% and 15%
D) more than 13%
C .C)
At 13% $230,000 0.885 $203,550
$370,000 0.783 289,710
$360,000 0.693 249,480
(720,000 )
Net Present Value $22,740
At 14% $230,000 0.877 $201,710
$370,000 0.769 284,530
$360,000 0.675 243,000
(720,000 )
Net Present Value $9,240
At 15% $230,000 0.87 $200,100
$370,000 0.756 279,720
$360,000 0.658 236,880
(720,000 )
Net Present Value $(3,300 )
You might also like to view...
Which of the following statements about locating facilities in the service sector is BEST?
A) The factors that apply to manufacturing firms often also apply to service facilities, but the impact of the location on sales and customer satisfaction is an important addition. B) Management should avoid locating facilities where competitors are already well established, as illustrated by new car showrooms. C) Creating a critical mass is a strategy that avoids locating near competing firms. D) "Site specific" factors are the main reason for locating warehousing and distribution operations near the customer.
In general terms, describe the difference between a general linear regression model and a trend projection
What will be an ideal response?