Financial Accounting: E9-16 Newport Department Store is considering development

Financial Accounting

Exercises 9-16 IRR and Unequal Cash Flows
Newport Department Store is considering development of an e-commerce business.
The company estimates that development will require an initial outlay of $1,470,000.Other cash flows will be as follows:
Initial Outlay (1,470,000)
Year 1 (700,000)
Year 2 221,000
Year 3 750,000
Year 4 850,000
Year 5 940,000

Required
Assuming the company limits its analysis to five years, estimate the internal rate of return of the e-commerce business. Should the company develop the e-commerce business if the required rate of return is 12 percent?
(Round present value factor calculations to 4 decimal places e.g. 0.2525. Round the final answer to 0 decimal places, e.g. 25%)

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