Boulderado has come up with a new composite snowboard. Development will take Boulderado four years and cost? $250,000 per? year, with the first of the four equal investments payable today upon acceptance of the project. Once in production the snowboard is expected to produce annual cash flows of? $200,000 each year for 10 years. ? Boulderado's discount rate is? 10%.
Calculate the IRR for the snow board project and use it to determine the maximum deviation allowable in the cost of capital estimate that leaves the investment decision unchanged.
The maximum deviation allowable is closest? to:
A. ?11.0%
B. ?1.0%
C. ?0.0%
D. ?2.5%