Val is considering purchasing a new video plasma display panel to use with her notebook computer. One model, the XJ3, costs $4400 new, while another, the Y19, sells for $3000. Val has determined that the salvage value after two years of service is $1900 for the XJ3 and $900 for the Y19. Both panels give similar service, except the Y19 is not suitable for client presentations. If she buys the Y19, about four times a year she will have to rent one similar to the XJ3, at a total year-end cost of about $250. Using the IRR method, which display panel is the better choice? Use a two- year study period. She must choose only one of the alternatives. Val's MARR is 10 percent. The is the better choice because the IRR for the change from is percent, which is ____________ the MARR (Round to one decimal place as needed.) %

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
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Val is considering purchasing a new video
plasma display panel to use with her
notebook computer. One model, the XJ3,
costs $4400 new, while another, the Y19,
sells for $3000. Val has determined that the
salvage value after two years of service is
$1900 for the XJ3 and $900 for the Y19. Both
panels give similar service,
except the Y19 is not suitable for client
presentations. If she buys the Y19, about four
times a year she will have to rent one similar
to the XJ3, at a total year-end cost
of about $250. Using the IRR method, which
display panel is the better choice? Use a two-
year study period. She must choose only one
of the alternatives. Val's
MARR is 10 percent.
The
is the better choice because
is
the IRR for the change from
percent, which is the MARR
(Round to one decimal place as needed.)
Transcribed Image Text:Val is considering purchasing a new video plasma display panel to use with her notebook computer. One model, the XJ3, costs $4400 new, while another, the Y19, sells for $3000. Val has determined that the salvage value after two years of service is $1900 for the XJ3 and $900 for the Y19. Both panels give similar service, except the Y19 is not suitable for client presentations. If she buys the Y19, about four times a year she will have to rent one similar to the XJ3, at a total year-end cost of about $250. Using the IRR method, which display panel is the better choice? Use a two- year study period. She must choose only one of the alternatives. Val's MARR is 10 percent. The is the better choice because is the IRR for the change from percent, which is the MARR (Round to one decimal place as needed.)
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