any is thinking in investing in one of two potential new products for sale. The projections are as follows: year Revenue/cost £ (Product S) Revenue/cost £ (Product V) 0 (150,000) outlay (150,000) outlay 1 14000 15000 2 24000 25333 3 44000 52000 4 84000 63333 a) Calculate the IRR for Product V only using 1% and 17% to 2 d.p.
any is thinking in investing in one of two potential new products for sale. The projections are as follows: year Revenue/cost £ (Product S) Revenue/cost £ (Product V) 0 (150,000) outlay (150,000) outlay 1 14000 15000 2 24000 25333 3 44000 52000 4 84000 63333 a) Calculate the IRR for Product V only using 1% and 17% to 2 d.p.
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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Question
A company is thinking in investing in one of two potential new products for sale. The
projections are as follows:
| year | Revenue/cost £ (Product S) | Revenue/cost £ (Product V) |
| 0 | (150,000) outlay | (150,000) outlay |
| 1 | 14000 | 15000 |
| 2 | 24000 | 25333 |
| 3 | 44000 | 52000 |
| 4 | 84000 | 63333 |
a) Calculate the IRR for Product V only using 1% and 17% to 2 d.p.
b) Outline the advantages and disadvantages of the IRR and payback using
appropriate academic sources.
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