b. Stand Alone Principal O c. Risk and Return Relationship d, Separation Princip

Question

b. Stand Alone Principal O c. Risk and Return Relationship d, Separation Principal QUESTION 26 3 points Save Answer Joanie's Hoagie Heaven can purchase cooking equipment on sale for $5,600. The asset has a three-year life, wil produce a cash flow of $2.300 in the first and second year. and $3 400 in the third year. The cost of capital is 14%," Whatt is the project's IRR? a. 15.29% b.1 0.4996. ° C. 18.73% d. 21.60% e. None of the above QUESTION 27 3 points Save Answer Joanie's Hoagie Heaven can purchase cooking equipment on sale for $5,600. The asset has a three-year life, will

Explanation / Answer

Let irr be x%
At irr,present value of inflows=present value of outflows.

Hence

5600=2300/1.0x+2300/1.0x^2+3400/1.0x^3

Hence x=IRR=18.73%(Approx).

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.