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Hole in Your Knees Blue Jeans Co. is considering the sale of their indigo dye facility....

Hole in Your Knees Blue Jeans Co. is considering the sale of their indigo dye facility. The facility has a remaining four years of life and would be sold for $200,000. The company would have to purchase (cash outflow) $75,000 annually in indigo dye for the next four years. Using a 10% required rate of return, compute the NPV for the decision to purchase indigo dye. Now compute the IRR for the same decision. What is your recommendation?

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Answer #1

B8 fc =IRR(B3:37) D ДА В N 2 year Cash flows pv@10% 0 $ 2,00,000.00 1 $ 75,000.00) 21 $ 75,000.00) 3 $ 75,000.00) 4 $ 75,000.

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