Question
5. (NPV and IRR) You work in a company that sells furniture. The company is considering a new marketing campaign. The marketing campaign cost is
5. (NPV and IRR) You work in a company that sells furniture. The company is considering a new marketing campaign. The marketing campaign cost is $1M to be paid immediately. You expect that as a result of the campaign, the company will increase its market share and will generate additional annual cash flows of $150,000 forever, starting 1 year fromnow. a. If your companys cost of capital (the discount rate) is 10%, should it undertake the marketing campaign? Explain. b. What is the marketing campaignsIRR? How is this computed using excel formulas?
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