An advertising campaign will cost $264,000 for planning and $54,000 in each of the next six years. It is expected to increase revenues permanently by $54,000 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 8 percent, is this a good investment? The IRR is percent, which is (Round to one decimal place as needed.) the MARR, so the advertising campaign a good investment.
An advertising campaign will cost $264,000 for planning and $54,000 in each of the next six years. It is expected to increase revenues permanently by $54,000 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 8 percent, is this a good investment? The IRR is percent, which is (Round to one decimal place as needed.) the MARR, so the advertising campaign a good investment.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:An advertising campaign will cost $264,000 for planning and $54,000 in each of the next six years. It is expected to increase revenues permanently by $54,000 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 8
percent, is this a good investment?
The IRR is percent, which is
(Round to one decimal place as needed.)
the MARR, so the advertising campaign
a good investment.
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