Question
Ford Motor Company is considering producing a new extremely limited-edition version of the Edsel (why, we have no idea!). The initial costs associated with retooling
Ford Motor Company is considering producing a new extremely limited-edition version of the Edsel (why, we have no idea!). The initial costs associated with retooling a manufacturing plant, redesign, initial marketing, raw materials and other costs would be $5 million at time zero.
The project is expected to generate ONLY ONE positive cash flow of $16 million. Given the complexity of the project, the cars will not be ready until 5 years from now. Ford estimates that shareholders will require to earn 20% on investments such as this.
What comes closest to the IRR on this project?
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Ford Motor Company is considering producing a new extremely limited-edition version of the Edsel (why, we have no idea!). The initial costs associated with retooling a manufacturing plant, redesign, initial marketing, raw materials and other costs would be $5 million at time zero.
The project is expected to generate ONLY ONE positive cash flow of $16 million. Given the complexity of the project, the cars will not be ready until 5 years from now. Ford estimates that shareholders will require to earn 20% on investments such as this.
What comes closest to the IRR on this project?
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