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An advertising campaign will cost $240,000 for planning and $36,000 in each of the next six years. It is expected to increase revenues permanently by $36,000 p year. Additional revenues will be gained in the pattern of an arithmetic gradient with $24,000 in the first year, declining by $6,000 per year to zero in the fifth year. What is the IRR of this investment? If the company's MARR is 9 percent, is this a good investment? The IRR is percent, which is the MARR, so the advertising campaign a good investment.

An advertising campaign will cost $240,000 for planning and $36,000 in each of the next six years. It is expected to increase revenues permanently by $36,000 p year. Additional revenues will be gained in the pattern of an arithmetic gradient with $24,000 in the first year, declining by $6,000 per year to zero in the fifth year. What is the IRR of this investment? If the company's MARR is 9 percent, is this a good investment? The IRR is percent, which is the MARR, so the advertising campaign a good investment.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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An advertising campaign will cost $240,000 for planning and $36,000 in each of the next six years. It is expected to increase revenues permanently by $36,000 per year. Additional revenues will be gained in the pattern of an arithmetic gradient with $24,000 in the first year, declining by $6,000 per year to zero in the fifth year. What is the IRR of this investment? If the company's MARR is 9 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.)
Transcribed Image Text:An advertising campaign will cost $240,000 for planning and $36,000 in each of the next six years. It is expected to increase revenues permanently by $36,000 per year. Additional revenues will be gained in the pattern of an arithmetic gradient with $24,000 in the first year, declining by $6,000 per year to zero in the fifth year. What is the IRR of this investment? If the company's MARR is 9 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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