Woodsy music is considering investing 625000 in private


Question - Woodsy Music is considering investing $625,000 in private lesson studios that will have no residual value. The studios are expected to result in annual net cash inflows of $90,000 per year for the next nine years. Assuming that Woodsy Music uses an 8% hurdle rate, what is the net present value (NPV) of the studio investment? Is this a favorable investment?

What is the approximate IRR of the studio investment?

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