RNO Ltd. just invested $119,000 into a new local network. Services provided by the network will bring $25,600 per year in the next 7 years. The following information is given: - Current MARR = 14% expected annual inflation = 2.8% - the network will be sold for salvage after 7 years; its depreciation rate is 22% (Declining Balance) -All Cashflow values, including salvage, are in real dollars Is this a good investment measured by the internal rate of return?
RNO Ltd. just invested $119,000 into a new local network. Services provided by the network will bring $25,600 per year in the next 7 years. The following information is given: - Current MARR = 14% expected annual inflation = 2.8% - the network will be sold for salvage after 7 years; its depreciation rate is 22% (Declining Balance) -All Cashflow values, including salvage, are in real dollars Is this a good investment measured by the internal rate of return?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:RNO Ltd. just invested $119,000 into a new local network.
Services provided by the network will bring $25,600 per year in
the next 7 years. The following information is given:
- Current MARR = 14%
expected annual inflation = 2.8%
- the network will be sold for salvage after 7 years; its
depreciation rate is 22% (Declining Balance)
-All Cashflow values, including salvage, are in real dollars
Is this a good investment measured by the internal rate of
return?
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