Decision-Making with Relevant Costs at Airbnb

• Values:
  • Relevant Costs of New Project: $9,000,000
  • Expected Annual Revenue: $3,000,000
  • Project Duration: 5 years
  • Discount Rate: 10%

• Requirements:
  1. Calculate the NPV of the new project.
  2. Determine the IRR and payback period.
  3. Discuss how relevant costs impact strategic decisions.
  4. Recommend whether Airbnb should proceed with the project.