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Should tanya make the investment if her required rate

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Tanya Sinclair, owner of Sinclair Fine Wine, is considering investing $87,930 in a temperature-controlled wine storage room. She plans to rent space to customers and expects to generate $25,000 annually (rental charges less miscellaneous expenses other than depreciation).

Required:

a. Assuming Tanya wishes to evaluate the project with a five-year tine horizon, what is the internal rate of return of the investment? (Ignore taxes.)
b. Should Tanya make the investment if her required rate of return is 12 percent?

Reference no: EM13955886

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