An investor on the "Shark Tank" has offered an entrepreneur a deal with his company. Part of the deal is the investor wants a royalty on his investment. The investor will "lend" the entrepreneur $293,125.00 but wants $2.00 per unit sold. The entrepreneur expects to sell 22,185.00 units per year each year going forward in perpetuity. What is the IRR for the investor?

An investor on the "Shark Tank" has offered an entrepreneur a deal with his company. Part of the deal is the investor wants a royalty on his investment. The investor will "lend" the entrepreneur $293,125.00 but wants $2.00 per unit sold. The entrepreneur expects to sell 22,185.00 units per year each year going forward in perpetuity. What is the IRR for the investor?

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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