Answer:
False is the correct answer.
Explanation:
when it comes to saving money, the best thing to do is to not spend the money.
$9.001% is the internal rate of return of this machine. as the initial investment of $43,158.
<h3>What is
internal rate of return?</h3>
The internal rate of return is the cost of borrowing at which the aggregate of all cash flows equals zero, and it is being used to analyze one investment to another.
If the person change 8% with 13.92% in the given example, the NPV becomes 0, and the IRR becomes zero. As a result, IRR is defined as the discount rate at which a project's net present value becomes zero.
Thus, $9.001% is the internal rate of return.
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Answer:
Re = 8.79%
Explanation:
annual growth rates:
($1.38 - $1.25) / $1.25 = 0.104
($1.49 - $1.38) / $1.38 = 0.078
($1.60 - $1.49) / $1.49 = 0.074
($1.69 - $1.60) / $1.60 = 0.056
geometric growth rate = ⁴√(1.104 x 1.078 x 1.074 x 1.056) - 1 = ⁴√1.34976 - 1 = 1.0779 - 1 = 0.0779 = 7.79%
P₀ = Div₁ / (Re - g)
$199 = $2 / (Re - 0.0779)
Re - 0.0779 = $2 / $199 = 0.01
Re = 0.01 + 0.0779 = 0.0879 = 8.79%
