You are the owner of Pink Fluffy Bunnies Incorporated. You currently produce a line of small...

Transcribed Image Text:

You are the owner of Pink Fluffy Bunnies Incorporated. You currently produce a line of small pink fluffy bunnies and are considering expanding production to include a line of large pink fluffy bunnies. It would mean an equipment upgrade to the tune of $70,000 and you project an additional annual revenue of $20,000. Assuming a five-year run, determine whether you should take on the project if your expected rate of return is (a) 10%, (b) 15%. Use linear interpolation to find the IRR. 10 marks You are the owner of Pink Fluffy Bunnies Incorporated. You currently produce a line of small pink fluffy bunnies and are considering expanding production to include a line of large pink fluffy bunnies. It would mean an equipment upgrade to the tune of $70,000 and you project an additional annual revenue of $20,000. Assuming a five-year run, determine whether you should take on the project if your expected rate of return is (a) 10%, (b) 15%. Use linear interpolation to find the IRR. 10 marks

Answer rating: 100% (QA)

niven Aritial outflow of Cash gnvestment 70000 3D Cash i... View the full answer