An investment costs $17,944 and will generate cash flow of $4,000 annually for six years. The firm's cost of capital is 10 percent. a. What is the investment's internal rate of return? Round your answer to the nearest whole number. b. Based on the internal rate of return, should the firm make the investment? c. What is the investment's net present valuc? Use a minus sign to enter a negative value, if any. Round your answer to the nearest dollar. d. Based on the net present value, should the firm make the investment?

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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An investment costs $17,944 and will generate cash flow of $4,000 annually for six years. The firm's
cost of capital is 10 percent.
a. What is the investment's internal rate of return? Round your answer to the nearest whole number.
b. Based on the internal rate of return, should the firm make the investment?
c. What is the investment's net present value? Use a minus sign to enter a negative value, if any.
Round your answer to the nearest dollar.
d. Based on the net present value, should the firm make the investment?
Transcribed Image Text:An investment costs $17,944 and will generate cash flow of $4,000 annually for six years. The firm's cost of capital is 10 percent. a. What is the investment's internal rate of return? Round your answer to the nearest whole number. b. Based on the internal rate of return, should the firm make the investment? c. What is the investment's net present value? Use a minus sign to enter a negative value, if any. Round your answer to the nearest dollar. d. Based on the net present value, should the firm make the investment?
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