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Kay Sadilla is considering investing in a franchise that will require an initial outlay of $75,000. She conducted market research and found that after-tax cash
Kay Sadilla is considering investing in a franchise that will require an initial outlay of $75,000. She conducted market research and found that after-tax cash flows on the investment should be about $15,000 per year for the next 7 years. The franchiser stated that Kay would generate a 20 percent return. Her cost of capital is 10 percent. Find the following:
the PVB
the PVC
the NPV
the IRR (Hint: Use interpolation, IRR is between 8 percent and 10 percent.)
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