Question

Internal rate of return  Peace of​ Mind, Inc.​ (PMI) sells extended warranties for durable consumer goods...

Internal rate of return  Peace of​ Mind, Inc.​ (PMI) sells extended warranties for durable consumer goods such as washing machines and refrigerators. When PMI sells an extended​ warranty, it receives cash up front from the​ customer, but later PMI must cover any repair costs that arise. An analyst working for PMI is considering a warranty for a new line of​ big-screen TVs. A consumer who purchases the ​2-year warranty will pay PMI ​$ 201. On​ average, the repair costs that PMI must cover will average ​$103 for each for the​ warranty's 2 years. If PMI has a cost of capital of 7 ​%, should it offer this warranty for​ sale?

1. The internal rate of return​ (IRR) for this project is? ​

(Round to two decimal​ places.)

2. The NPV of this project is ​$ nothing? .

help!

​(Round to two decimal​ places.)

Homework Answers

Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

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