An advertising campaign will cost $200,000 for planning and $30,000 in each of the next six years. It is expected to increase revenues permanently by $30,000 per year. Additional revenues will be gained in the pattern of an arithmetic gradient with $20,000 the first year, declining by $5,000 per year to zero in the fifth year. What is the IRR of this investment? If the company's MARR is 8 percent, is this a good investment? The IRR is percent, which is v the MARR, so the advertising campaign Va good investment.
An advertising campaign will cost $200,000 for planning and $30,000 in each of the next six years. It is expected to increase revenues permanently by $30,000 per year. Additional revenues will be gained in the pattern of an arithmetic gradient with $20,000 the first year, declining by $5,000 per year to zero in the fifth year. What is the IRR of this investment? If the company's MARR is 8 percent, is this a good investment? The IRR is percent, which is v the MARR, so the advertising campaign Va good investment.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:An advertising campaign will cost $200,000 for planning and $30,000 in each of the next six years. It is expected to increase revenues permanently by $30,000 per year. Additional revenues will be gained in the pattern of an arithmetic gradient with $20,000 in
the first year, declining by $5,000 per year to zero in the fifth year. What is the IRR of this investment? If the company's MARR is 8 percent, is this a good investment?
The IRR is percent, which is
the MARR, so the advertising campaign
a good investment.
(Round to one decimal place as needed.)
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