25% is wrong

Your boss has just presented you with the summary in the accompanying table of projected costs and annual receipts for a new product line. He asks you to calculate the IRR for this investment opportunity. What would you present to your boss, and how would you explain the results of your analysis? (It is widely known that the boss likes to see graphs of PW versus interest rate for this type of problem.) The company's MARR is 10% per year. End of Year 0 1 1 2 3 4 4 5 Net Cash Flow - $450,000 -42,500 +92,800 + 388.000 +614,800 -$202,200 The IRR is 25 %. (Round to one decimal place.) Plot the graph of PW versus interest rate. Choose the correct graph below. . PW1%) $500,000 $400,000 $300,000 S200,000 IRR = 21.596 $100,000 So- 10 20 30 40 50 60 $100,000 -S200,000 $300,000- S400,000 S500.000- OB. PW(1%) S600,000 $500,000 $400,000 $300,000 IRR = 10% $200,000 $100,000 Sot -S100.000- 10 20 20 30 S200,000 S300,000 S400,000 70 BO 90 100 40 50 60 70 80 90 100 S500.000 S600.000- a Oc. PW1%) $600,000 $500,000 S400,000 $300,000 IRR = 10% $200,000 $100,000 SO -S100,000 10 20 30 40 50 60 70 80 90 100 S200,000 $300,000 S400,000 S500,000 S600.000- OD. PW1%) a $500,000 $400,000 $300,000 S200,000 IRR = 21.5% $100,000 so $100,000 10 20 0 40 50 60 70 80 90 100 S200,000 $300,000 S400,000 S500,000 Using the calculations the new product line appears to be (1) (1) O not profitable O profitable