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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Transcribed Image Text:For the following table, assume a MARR of 10% per year and a useful life for each alternative of six years that equals the study period. The rank-order of alternatives from least capital investment to greatest capital investment is Do Nothing → A
→ C → B. Complete the IRR analysis by selecting the preferred alternative.
The IRR of A (C→ B) is%. (Round to one decimal place.)
A Capital investment
A Annual revenues
A Annual costs
A Market value
A IRR
Do Nothing → A
- $15,000
4,000
- 1,000
6,000
12.7%
A → C
- $2,000
900
-150
-2,220
10.5%
C → B
-$3.500
460
-75
3.500
???
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