Comfy Home is considering investing in a new shop location. The decorating and installation of the shop including staff training will cost $30,000 upfront. The investment will generate the net cash flows below over the next 10 years. Comfy Homes discount rate is 9%.

What is the internal rate of return of this investment?

Use a spreadsheet to calculate your answer. Enter your answer as a percent (for example, for 7%, enter '7')

Cash Flows:

Year 0 $(30,000) (year of investment)

Year 1 $2,000

Year 2 $2,000

Year 3 $3500

Year 4 $3,500

Year 5 $3,500

Year 6 $4,500

Year 7 $4,150

Year 8 $5,000

Year 9 $5,000

Year 10 $5,000

S $ $ S S COMFY HOME COMPANY Balance Sheet As of December 31, 2016 Current Assets: Current Liabilities: Cash 110,000 Accounts Payable 90,000 Accounts receivable S 140,000 Salaries and wages payable 20,000 Inventories S 310,000 Current portion of bank loan $ 45,000 Prepaid expenses $ 25,000 Deferred revenue $ 15,000 Total Current Assets $ 585,000 Total Current Liabilities $ 170,000 Non-Current Assets: Non-Current Liabilities: Furniture and fixtures 120,000 Bank Loan $ 300,000 Buildings and property 450,000 Total Non-Current Liabilities $ 300,000 (Accumulated Depreciations (154,000) Total Non-Current Ass $ 416,000 Owners' Equity: Contributed Capital $ 250,000 Retained earnings $ 281,000 Total Equity $ 531,000 Total Assets $ 1,001,000 Total Liabilities and Owners' $ 1,001,000 COMFY HOME COMPANY COMFY HOME COMPANY Balance Sheet Income Statement As of December 31, 2017 For the year ending December 31, 2017 Current Assets: Current Liabilities: Total Revenue $ 1,602,000 Cash s 143,000 Accounts Payable $ 196,000 Cost of Goods Sol $ 985,000 Accounts receivable $ 178,000 Salaries and wages payable $ 30,000 Gross Profit $ 617,000 Inventories $ 358,000 Current portion of bank loan 45,000 Salaries and wages $ 199,000 Prepaid expenses $ 33,000 Deferred revenue 18,000 Marketing expense $ 46,000 Total Current Assets 712,000 Total Current Liabilities 289,000 Selling, General, a $ 98,000 Insurance expense $ 48,000 Non-Current Assets: Non-Current Liabilities: Depreciation exper $ 44,000 Furniture and fixtures S 150,000 Bank Loan $ 255,000 Operating Profit $ 182,000 Buildings and property 540,000 Total Non-Current Liabilities $ 255,000 Interest expense $ 30,000 (Accumulated Depreciations (198,000) Taxes $ 33,000 Total Non-Current Ass $ 492,000 Owners' Equity: Net Income $ 119,000 Contributed Capital 260,000 Retained earnings 400,000 Total Equity $ 660,000 Total Assets 1,204,000 Total Liabilities and Owners' $ 1,204,000 $ $ $ S $ $ $