11. (2 marks) Bill plans to open a do-it-yourself dog-bathing centre in a storefront. The bathing equipment will cost $160,000. Bill expects the after-tax cash inflows to be $40,000 annually for seven years, after which he plans to scrap the equipment and retire to the beaches of Jamaica. Assume the required return is 17%. What is the project's IRR? Should it be accepted? A. 12.2%; yes B. 12.2%; no C. 16.3%; yes D. 16.3%; no E. 17%; indifferent
11. (2 marks) Bill plans to open a do-it-yourself dog-bathing centre in a storefront. The bathing equipment will cost $160,000. Bill expects the after-tax cash inflows to be $40,000 annually for seven years, after which he plans to scrap the equipment and retire to the beaches of Jamaica. Assume the required return is 17%. What is the project's IRR? Should it be accepted? A. 12.2%; yes B. 12.2%; no C. 16.3%; yes D. 16.3%; no E. 17%; indifferent
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![11. (2 marks) Bill plans to open a do-it-yourself dog-bathing centre in a storefront. The bathing
equipment will cost $160,000. Bill expects the after-tax cash inflows to be $40,000 annually for
seven years, after which he plans to scrap the equipment and retire to the beaches of Jamaica.
Assume the required return is 17%. What is the project's IRR? Should it be accepted?
A. 12.2%; yes
B. 12.2%; no
C. 16.3%; yes
D. 16.3%; no
E. 17%; indifferent](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faffd4ba8-13f4-4a2f-9084-0f3b886c735e%2F8d7b3c0f-019b-4f5e-b31d-15db16e09da5%2Frxuunz_processed.png&w=3840&q=75)
Transcribed Image Text:11. (2 marks) Bill plans to open a do-it-yourself dog-bathing centre in a storefront. The bathing
equipment will cost $160,000. Bill expects the after-tax cash inflows to be $40,000 annually for
seven years, after which he plans to scrap the equipment and retire to the beaches of Jamaica.
Assume the required return is 17%. What is the project's IRR? Should it be accepted?
A. 12.2%; yes
B. 12.2%; no
C. 16.3%; yes
D. 16.3%; no
E. 17%; indifferent
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