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Management is trying to decide whether or not to build a new factory. They have estimated...
Management is trying to decide whether or not to build a new factory. They have estimated revenues of $90,000 in year one and $70,000 in years two through ten. In 10 years the factory is obsolete. They estimate expenses annually to operate the factory in years 2 through 10 would be $40,000. The cost of the new factory is $310,000 The payments required are $80,000 immediately with the remainder due in one year. The company uses an interest rate of 6.7%. What is the net present value of this factory? $ What can you say about the internal rate of return for this factory? The IRR is less than 6.7%. The IRR is equal to 6.7%. The IRR is greater than 6.7%. Nothing.
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ekkarill92 answered 1 year agoRelated Solutions
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