The Introduction of a New Product Requires an Immediate Outlay

question 26

Essay

The introduction of a new product requires an immediate outlay of $145 000 and has a residual value of $30 000 after 10 years. The anticipated net returns from the marketing of the product are expected to be $25 500 per year for ten years. What is the rate of return on the investment (correct to the nearest tenth of a percent)?
a) Use linear interpolation to find the approximate value of the rate of return.
b) Find the answer using Cash Flow and IRR.

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Definitions:

Manifest Content

In psychoanalytic theory, the apparent, literal content of a dream, as distinguished from its latent content, which is hidden.

Latent Content

In dream analysis, the hidden psychological meaning of a dream, as opposed to the literal storyline (manifest content).

Freud

Sigmund Freud, an Austrian neurologist and the founder of psychoanalysis, known for his theories about the unconscious mind and psychosexual development.

Erogenous Zone

An area of the human body that has heightened sensitivity, the stimulation of which may generate a sexual response, including sexual arousal and the production of sexual pleasure.