1. You are considering an investment in a clothes distributer. The company needs $102,000 today and expects to repay you $122,000 in a year from now. What is the IRR of this investment opportunity? Given the riskiness of the investment opportunity, your cost of capital is 18%. What does the IRR rule say about whether you should invest? What is the IRR of this investment opportunity. The IRR of this investment opportunity is --------%. (Round to one decimal place.)
2. You are a real estate agent thinking of placing a sign advertising your services at a local bus stop. The sign will cost $6,000 and will be posted for one year. You expect that it will generate additional revenue of $960 a month. What is the payback period? The payback period is ------ months. (Round to two decimal places.)
3. You are considering making a movie. The movie is expected to cost $10.5 million upfront and take a year to make. After that, it is expected to make $4.1 million in the first year it is released (end of year 2) and $2.2 million for the following four years (end of years 3 through 6) . What is the payback period of this investment. If you require a payback period of two years, will you make the movie What is the NPV of the movie if the cost of capital is 10.3% According to the NPV rule, should you make this movie. What is the payback period of this investment? The payback period is -------- years. (Round up to nearest integer.)