# Manny Kurr is considering the purchase of a beauty salon. The initial cost of this purchase is

## Question:

a) Payback—Should Manny buy the beauty salon based on payback if his required payback is less than three years?

b) The present value of the benefits (PVB)

c) The present value of the costs (PVC).

d) The net present value (NPV)—Should Manny buy the beauty salon based on NPV rules?

e) Profitability index (PI)—What does the profitability index mean in terms of buying the beauty salon?

f) Internal rate of return (IRR) (Hint: use interpolation)--Should Manny buy the beauty salon based on IRR rules?

g) Accounting rate of return (ARR)—Should Manny buy the beauty salon based on the ARR? Net Present Value

What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... 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... Cost Of Capital

Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...

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