An advertising campaign will cost $ 200 000 for planning and $ 40 000 in each of the next six years. It is expected to increase revenues permanently by $ 40 000 per year. Additional revenues will be gained in the pattern of an arithmetic gradient with $ 20 000 in the first year, declining by $ 5000 per year to zero in the fifth year. What is the IRR of this investment? If the company’s MARR is 12 percent, is this a good investment? answer should be=12.4%
An advertising campaign will cost $ 200 000 for planning and $ 40 000 in each of the next six years. It is expected to increase revenues permanently by $ 40 000 per year. Additional revenues will be gained in the pattern of an arithmetic gradient with $ 20 000 in the first year, declining by $ 5000 per year to zero in the fifth year. What is the IRR of this investment? If the company’s MARR is 12 percent, is this a good investment? answer should be=12.4%
Chapter16: The Markets For Labor, Capital, And Land
Section: Chapter Questions
Problem 12P
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An advertising campaign will cost $ 200 000 for planning and $ 40 000 in each of the next six years. It is expected to increase revenues permanently by $ 40 000 per year. Additional revenues will be gained in the pattern of an arithmetic gradient with $ 20 000 in the first year, declining by $ 5000 per year to zero in the fifth year. What is the
answer should be=12.4%
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