Question
A new graduate is deciding which dress shoes to purchase for his new job. Regular quality shoes that will last 1 year can be purchased
A new graduate is deciding which dress shoes to purchase for his new job. Regular quality shoes that will last 1 year can be purchased for $100, but premium shoes that last 2 years cost $160. The purchases will need to be left on the credit card, where the student is paying an effective 32% interest rate. What is the NPV of purchasing the premium shoes instead of a pair of regular quality shoes in each of the first two years?
XYZ Corp. is evaluating two projects. Project A has $50 thousand in up-front costs, and has after-tax cash flows of $10 thousand, $20 thousand, and $30 thousand during the first three years. Project B has $80 thousand in up-front costs, and has after-tax cash flows of $15 thousand, $30 thousand, and $50 thousand. The companys WACC is 6%.
What is the IRR for project B?
Calculate the IRR for the following projects with a discount rate of 12%:
Project 1 costs $100,000 and earns $50,000 each year for three years.
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