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Mademuasel [1]
3 years ago
11

Technology Corp. is considering a $238,160 investment in a new marketing campaign that it anticipates will provide annual cash f

lows of $52,000 for the next five years. The firm has a 6% cost of capital. What should the analysis indicate to the firm's managers?(a) IRR is 8%. Accept the project.
(b) IRR is 3%. Reject the project.
(c) IRR is 4%. Reject the project.
(d) IRR is 6%. Accept the project.
Business
1 answer:
LUCKY_DIMON [66]3 years ago
4 0

Answer:

B) IRR is 3%. Reject the project.

Explanation:

We can use an excel spreadsheet to calculate the internal rate of return (IRR) for this investment:

we can use the IRR function =IRR(values,[guess])

where:

  • value 1 = -238160
  • value 2 to 6 = 52000
  • guess = optional, not required

=IRR(-238160,52000,52000,52000,52000,52000) = 3%

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Answer: Alternative 3 will be selected.

Explanation:

The system that should be selected is the alternative that is better than the other alternatives by being higher than MARR if selected.

First compare A1 to A0

The rate of return here is 18% which is higher than the MARR of 15% so Alternative 1 should be chosen over A0 which is to do nothing.

Compare A1 to A2

If A2 is chosen over A1, the incremental return is 10% which is less than the MARR of 15% so A2 should not be chosen over A1. A1 should instead be chosen over A2.

Compare A1 to A3

If A3 is chosen over A1 then the incremental return would be 18%. This is higher than the MARR of 15% so Alternative 3 should be chosen over Alternative 1.

Alternative 3 should be chosen over A1 which should be chosen over A2 and A0.

A3 will therefore be selected.

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Answer:

C

Explanation:

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7 0
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ElenaW [278]

Answer:

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Material breach in contract law refers to one party failing to perform under the contract significantly enough so that the aggrieved party has the right to sue for breach of contract.

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