Question
You want to start an organic garlic farm. The farm costs $210,000, to be paid in full immediately. Year 1 cash flows will be $25,000,
You want to start an organic garlic farm. The farm costs $210,000, to be paid in full immediately. Year 1 cash flows will be $25,000, and grow at 5% a year into year 5 when you decide to sell the farm at the end of the year for $260,000 (in year 5 you get cash flows from selling both the garlic and the farm). Assuming these estimates are all correct, what is the IRR of the garlic farm investment? Round to the tenth of a percent (e.g. 5.6%=5.6). [Hint: You'll want to solve this in Excel using the IRR function or Goal Seek. Make sure the IRR cell is set to show decimals.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started