Question
A company plans to expand its business for which it requires an investment of $17,000. Your finance department has projected revenue in the amount of
A company plans to expand its business for which it requires an investment of $17,000. Your finance department has projected revenue in the amount of 2,500, 4,500, 3,000, 4,500, and 5,500 over the next 5 years. It has also determined that during the first year they will have costs of 1100 the first year of starting the project and that this will have an increase of 10% during the following 4 years. The company currently invests its surpluses in an investment fund that pays them an effective rate of 17% per year.
You are asked to determine the feasibility of the project using the Internal Rate of Return criterion.
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