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Svetach [21]
3 years ago
9

Lennon, Inc. is considering a five-year project that has an initial outlay or cost of $80,000. The respective future cash inflow

s from its project for years 1, 2, 3, 4 and 5 are: $15,000, $25,000, $35,000, $45,000, and $55,000. Lennon uses the internal rate of return method to evaluate projects. What is Lennon's IRR
Business
1 answer:
SIZIF [17.4K]3 years ago
4 0

Answer:

26.16%

Explanation:

Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested

IRR can be determined using a financial calculator

CO = -80,000

C1 = $15,000

C2 = $25,000

C3 = $35,000,

C4 = $45,000

C 5 = 55,000

IRR = 26.16

To determine IRR using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.  

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For the statement  "The payoff matrix represents hypothetical profits that could be earned by two milk..." and the Milky Mose table  Both will cheat Option C. This is further explained below.

<h3>What is a payoff matrix?</h3>

Generally, payoff matrix is simply defined as when one player's tactics and those of the other are represented in a table called a payoff matrix, they are listed in rows.

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The payoff matrix below represents hypothetical profits that could be earned by two milk sellers who have formed a cartel. Each seller must decide if they want to cheat or not to cheat on the production quotas in the cartel agreement. Use the payoff matrix to answer the questions below. Does either member have an incentive to cheat? Heifer's Gold will cheat, but Milky Moo will not. No, neither has an incentive to cheat, Yes, both will cheat. Milky Moo's will cheat, but Heifer's Gold will not

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8 0
2 years ago
On January 1, 2004, Kay Inc. issued its 10% bonds in the face amount of $400,000, which mature on January 1, 2014. The bonds wer
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Unamortized discount is $43,700

Explanation:

Unamortized bond discount=original bond discount-amortization to date

original bond discount is $46,000

Amortization =interest  payable-interest expense

interest payable=$400,000*10%*6/12

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Interest expense=$354,000*10%*6/12

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The unamorized bond discount at the end of the first six months is $43,700

                     

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