Internal rate of return Peace of Mind, Inc. $($PMI$)$ sells extended warranties for

durable consumer goods such as washing machines and refrigerators. When PMI

sells an extended warranty, it receives cash up front from the customer, but later

PMI must cover any repair costs that arise. An analyst working for PMI is

considering a warranty for a new line of big$-$screen TVs$.$ A consumer who

purchases the $2-$year warranty will pay PMI $$200.$ On average, the repair costs

that PMI must cover will average $$106$ for each for the warranty's $2$ years. If PMI

has a cost of capital of $7\%,$ should it offer this warranty for sale?

The internal rate of return $($IRR$)$ for this project is $3\mathrm{.}97\%.($Round to two

decimal places.$)$

The NPV of this project is $$.($Round to two decimal places.$)$