Question: Refer to Connors Music in S12 11 What is the

Refer to Connors Music in S12- 11. What is the approximate internal rate of return (IRR) of the studio investment?

In S12- 11.
Connors Music is considering investing $ 650,000 in private lesson studios that will have no residual value. The studios are expected to result in annual net cash inflows of $ 90,000 per year for the next ten years. Assuming that Connors Music uses an 12% hurdle rate, what is net present value (NPV) of the studio investment? Is this a favorable investment?

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  • CreatedAugust 27, 2014
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