![maleja2038](/avatars/1425.jpg)
maleja2038
19.03.2020 •
Business
Boulderado has come up with a new composite snowboard. Development will take Boulderado four years and cost $250,000 per year, with the first of the four equal investments payable today upon acceptance of the project. Once in production the snowboard is expected to produce annual cash flows of $200,000 each year for 10 years. Boulderado's discount rate is 10%. The IRR for boulderado's snow board project is closest to :
A. 10.4%
B.10.0%
C.11.0%
D.15.1%
Solved
Show answers
More tips
- C Computers and Internet Boost your processor performance with these easy tips...
- L Leisure and Entertainment When will Maslenitsa start?...
- F Food and Cooking Discovering the Mysterious Fruit of Feijoa...
- B Business and Finance How to Open an Online Store? A Detailed Guide for Beginners...
- W Work and Career How to Write a Resume That Catches the Employer s Attention?...
- C Computers and Internet Е-head: How it Simplifies Life for Users?...
- F Family and Home How to Choose the Best Diapers for Your Baby?...
- F Family and Home Parquet or laminate, which is better?...
- L Leisure and Entertainment How to Properly Wind Fishing Line onto a Reel?...
- L Leisure and Entertainment How to Make a Paper Boat in Simple Steps...
Answers on questions: Business
- B Business Problem number 4 says: cuba is starting an event planning company. he wants to protect his liability, and he would prefer pass through taxation. problem number 5 says: ming is starting...
- H Health Hey guys yes I know this is a lot I m very very sorry but my brother is once again struggling and I m currently really busy so can you guys please answer and explain to him why? This...
- M Mathematics Can any one help me please...
- E English Vard Which sentence shows that Momma tries to help Elizabetta think of an idea?...
- E English The material to build the Taj Mahal originally came from nearby. Inlaid minarets proclaimed quarries...
- M Mathematics You deposit $1000 in an account that pays 7% interest compounded semiannually. After 4 years, the interest rate is increased to 7.36% compounded quarterly. What will be the value of...
- M Mathematics If g(x) = 4v1 – 8, which statement is true? A. The y-intercept of g(x) is less than the y-intercept of f(x). B. The y-intercept of g(x) is equal to the y-intercept of Ax). C. The x-intercept...
- P Physics Which image shows both potential and kinetic energy...
- E English How does Eurydice slipping back into the Underworld support the theme? - THEME: TRUE LOVE IS WORTH FIGHTING FOR, BUT WITHOUT TRUST AND FAITH, IT CANNOT SURVIVE....
- C Chemistry Why did you only vary either the amount of baking soda or the amount of vinegar and not both at the same time? I have four containers with the same amount of baking soda but varying...
Ответ:
The answer is C: 11%
Workings for NPVs are attached.
Explanation:
What Is Internal Rate of Return – IRR?
The internal rate of return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments. The internal rate of return is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero. IRR calculations rely on the same formula as NPV does.
Tip:
To calculate the IRR we need to perform a hit and trial method - rule of thumb is, use the discount factor, that give one positive and one negative NPV, suppose, if 10% discount factor gives a positive NPV, we should choose the second discount factor that is above 10%, so the cost of investment will be high and thus giving us a negative NPV.
IRR calculations:
Key metrix used:
Discount factor (rₐ) = 10% (lowest discount factor)
NPV at lowest discount factor = 51,608
Discount factor (rb) = 15% (highest discount factor)
NPV at highest discount factor = - 161,000
IRR Formula:
IRR Formula = rₐ +
× (rb - ra)
IRR Formula = 10% +
× (15% - 10%)
IRR Formula = 11%
Ответ:
The correct answers would be
A. Health Care - Doctors, medicine
B. Insurance - Health, life, renter's
C. Clothing - Hair care, dry cleaning, shoes
D. Entertainment - Movie, eating out, concerts
E. Utilities - Electricity, water, gas
F. Food - Fruits, grains, snacks, beverages
G. Housing - Rent or mortgage
H. Communication - Phone internet
I. Children - Babysitting, school fees
J. Transportation - Bus, bike, car