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Use the trial and error method combined with linear interpolation to solve for the IRR of The Judas design (to one decimal place, XX.X%)

Use the trial and error method combined with linear interpolation to solve for the IRR of The Judas design (to one decimal place, XX.X%)

Essentials Of Investments
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
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Use the trial and error method combined with linear interpolation to solve for the IRR of The Judas design (to one decimal place, XX.X%)
Problem 1 Four alternative designs are being considered for a pet- exercising treadmill. The company's MARR is 18%. The cash flows associated with each are given in the following table. The Judas The Lancelot The Bella The Lilo Capital Investment $120,000 $130,000 $141,000 $160,000 Annual Revenues $50,000 $50,000 $50,000 $50,000 Annual Expenses $20,000 $15,000 $13,000 $14,000 Refurbishment Cost at EOY 5 $23,000 $23,000 $18,000 $15,000 Market Value after 10 years $4,000 $4,000 $5,000 $15,000 IRR ??? 21.8% 21.6% 17.7%
Transcribed Image Text:Problem 1 Four alternative designs are being considered for a pet- exercising treadmill. The company's MARR is 18%. The cash flows associated with each are given in the following table. The Judas The Lancelot The Bella The Lilo Capital Investment $120,000 $130,000 $141,000 $160,000 Annual Revenues $50,000 $50,000 $50,000 $50,000 Annual Expenses $20,000 $15,000 $13,000 $14,000 Refurbishment Cost at EOY 5 $23,000 $23,000 $18,000 $15,000 Market Value after 10 years $4,000 $4,000 $5,000 $15,000 IRR ??? 21.8% 21.6% 17.7%
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