Question: Exercise 17.5 #2 Academic Publishing is trying to decide which of two books to publish. The larger book will cost $125,000 to publish and print.

 Exercise 17.5 #2 Academic Publishing is trying to decide which of

Exercise 17.5 #2 Academic Publishing is trying to decide which of two books to publish. The larger book will cost $125,000 to publish and print. Sales are expected to produce an annual profit of $32,000 for five years. The smaller book will cost $76,000 to publish and print, and should generate an annual profit of $20,000 for five years. a. Calculate the internal rate of return on each book. (Round your answer to 1 decimal place.) The IRR on the larger book % The IRR on the smaller book % On the basis of their IRRS, which book should be published? The (Click to select) book should be published. b. Which book should be published if the firm's cost of capital is 8%? The (Click to select) book should be published. c. Which book should be published if the firm's cost of capital is 6%? The (Click to select) book should be published

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!