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Reggie has just taken over management of a family business. He wants to make sure that it makes financial sense to keep the business going.
Reggie has just taken over management of a family business. He wants to make sure that it makes financial sense to keep the business going. He could sell the building today for $480,000. Keeping the business going will require a $50,000 renovation now and will yield an annual profit of $64,000 for the next 15 years (for simplicity assume these occur at year end, beginning one year from now). The discount/interest rate is 6%. What are the NPV and IRR of this decision?
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1 Calculate the present value of the annual profits for the next 15 years Annual profit 64000 Discou...Get Instant Access to Expert-Tailored Solutions
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