You are considering an investment in a clothes distributer. The company needs $104,000 today and expects to repay you $129,000 in a year from now. What is the IRR of this investment opportunity? Given the riskiness of the investment opportunity, your cost of capital is 17%. What does the IRR rule say about whether you should invest?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 5PB: Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated...
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You are considering an investment in a clothes distributer. The company needs $104,000 today and expects to repay you $129,000 in a year from now. What is
the IRR of this investment opportunity? Given the riskiness of the investment opportunity, your cost of capital is 17%. What does the IRR rule say about whether
you should invest?
Transcribed Image Text:You are considering an investment in a clothes distributer. The company needs $104,000 today and expects to repay you $129,000 in a year from now. What is the IRR of this investment opportunity? Given the riskiness of the investment opportunity, your cost of capital is 17%. What does the IRR rule say about whether you should invest?
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