Britney is a big fan of movie. She installed a family theater in her basement which costed her ?$2,300. With this family? theater, she does not need to go to the theater which can save her $360 per year for seven years. The minimal acceptable rate of return is 8?% per year.
a. What is the minimum salvage value of those family theater devices after seven years that makes the family theater worth of? building?
b. What is the family theater? devices’ IRR if the salvage value is? zero?