Aline has three contracts from which to choose. The first contract will require an outlay of $100,000 but will return $135,000 one year from now. The second contract requires an outlay of $220,000 and will return $315,000 one year from now. The third contract requires an outlay of $290,000 and will return $399,000 one year from now. Only one contract can be accepted. If her MARR is 25 percent, which one should she choose? percent. For the increment from the first contract to the second contract, the IRR is percent. For the increment from the second contract to the third contract, the IRR is percent. Therefore, For the increment from the do-nothing alternative to the first contract, the IRR is should be chosen. (Type integers or decimals rounded to one decimal place as needed.)
Aline has three contracts from which to choose. The first contract will require an outlay of $100,000 but will return $135,000 one year from now. The second contract requires an outlay of $220,000 and will return $315,000 one year from now. The third contract requires an outlay of $290,000 and will return $399,000 one year from now. Only one contract can be accepted. If her MARR is 25 percent, which one should she choose? percent. For the increment from the first contract to the second contract, the IRR is percent. For the increment from the second contract to the third contract, the IRR is percent. Therefore, For the increment from the do-nothing alternative to the first contract, the IRR is should be chosen. (Type integers or decimals rounded to one decimal place as needed.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Aline has three contracts from which to choose. The first contract will require an outlay of $100,000 but will return $135,000 one year from now. The second contract requires an outlay of $220,000 and will return $315,000 one year from now. The third contract requires an outlay
of $290,000 and will return $399,000 one year from now. Only one contract can be accepted. If her MARR is 25 percent, which one should she choose?
percent. For the increment from the first contract to the second contract, the IRR is percent. For the increment from the second contract to the third contract, the IRR is
For the increment from the do-nothing alternative to the first contract, the IRR is
should be chosen.
(Type integers or decimals rounded to one decimal place as needed.)
percent. Therefore,
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