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Internal rate of return  Peace of​ Mind, Inc.​ (PMI) sells extended warranties for durable consumer goods...

Internal rate of return  Peace of​ Mind, Inc.​ (PMI) sells extended warranties for durable consumer goods such as washing machines and refrigerators. When PMI sells an extended​ warranty, it receives cash up front from the​ customer, but later PMI must cover any repair costs that arise. An analyst working for PMI is considering a warranty for a new line of​ big-screen TVs. A consumer who purchases the 2​-year warranty will pay PMI ​$207. On​ average, the repair costs that PMI must cover will average ​$102 for each for the​ warranty's 2 years. If PMI has a cost of capital of 6​%, should it offer this warranty for​ sale?

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jeff jeffy answered 5 months ago
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