In fiscal 2007, Best Buy invested $251 million in store-related projects that included store remodels, relocations, expansions,
Question:
In fiscal 2007, Best Buy invested $251 million in store-related projects that included store remodels, relocations, expansions, and various merchandising projects. Assume that these projects have a seven-year life, and that Best Buy requires a 12% internal rate of return on these projects.
Required
What is the amount of annual cash flows that Best Buy must earn from these projects to have a 12% internal rate of return?
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Internal Rate of ReturnInternal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment...
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We know that the internal rate of return equals the annual cash flows times the pre...View the full answer
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