: A potential project is described monetarily in the table below:

First Cost $250,000

Annual Benefits $75,000

Life (years) 4

Salvage Value$30,000

Additionally, the product of the project is a new type of heart valve. It will be sold by a heart pacemaker manufacturer. Often, the pacemaker recipients also need a heart valve.

a) Based on the example risk-adjusted interest rates for manufacturing projects shown in Table 15-2, which of those interest rates should be used to evaluate whether this project should be done or not?

Answer:

Reasoning:

b) What is the irr of this project?

Answer:

Reasoning:

c) Should this project be done?

Answer:

Reasoning: