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You are considering the purchase of a small Youth Hostel in the ski country of Northern Idaho, USA. The initial cost of this purchase is
- You are considering the purchase of a small Youth Hostel in the ski country of Northern Idaho, USA. The initial cost of this purchase is $125,000. The after-tax cash flow from this investment is estimated to be $30,000 per year for the next 5 years. The opportunity cost of capital is 8%. Calculate the following.
- Profitability Index (PI) what does the profitability index mean in terms of buying the youth hostel?
- Internal Rate of Return (IRR) (use interpolation) should you buy the youth hostel based on IRR rules?
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Truth About Buying Annuities Annuities Can Make Or Break Your Retirement
Authors: Steve Weisman
1st Edition
0132353083,0132701162
