You have the following information about Burgundy Basins, a sink manufacturer. Burgundy is contemplating what for the

Question:

You have the following information about Burgundy Basins, a sink manufacturer.

Burgundy is contemplating what for the company is an average-risk investment costing $40 million and promising an annual ATCF of $6.4 million in perpetuity.
a. What is the internal rate of return on the investment?
b. What is Burgundy€™s weighted-average cost of capital?
c. If undertaken, would you expect this investment to benefit share-holders? Why or why not?

Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment...