Question

Suppose that you are planning to take a year vacation to bike across the United States. Someone is willing to sell you a new bicycle for $ 500. At the end of the year, you expect to resell the bicycle for $ 350. The benefit to you of using the bicycle is the equivalent of $ 170.
a. What is the internal rate of return?
b. If the discount rate is 5 percent, should you buy the bicycle?


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  • CreatedMarch 25, 2015
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