Business, 28.02.2020 23:13 gorbyalexis

You are evaluating an investment that requires $1,000 upfront, and pays $100 at the end of each of the first 2 years, and an additional lump-sum of $2,000 at the end of year 2. What would happen to the IRR if the annual payments at the end of each of the first 2 years go down from $100 to $50?

a. IRR increases
b. IRR decreases
c. IRR remains constan

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Answer from: aesthetickait

b. IRR decreases

Explanation:

Internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.

IRR can be calculated using a financial calculator:

IRR when payment at the end of the first two years is $100

Cash flow in year 0 = -$1,000

Cash flow in year 1 = $100

Cash flow in year 2 = $100 +$2000=$2100

IRR = 50%

IRR when payment at the end of the first two years is $50

Cash flow in year 0 = -$1,000

Cash flow in year 1 = $50

Cash flow in year 2 = $50 +$2000=$2050

IRR = 45.70%

From the calculation, one can see that the IRR when cash flow at the end of the first two years was $100 is higher.

I hope my answer helps you

Answer from: Quest

1 b) the use of non-standard grammar

2 a) quiet and shy.

Answer from: Quest

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

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