Hole in Your Knees Blue Jeans Co. is considering the sale of their indigo dye facility. The facility has a remaining fo
Posted: Sun Jun 05, 2022 7:00 am
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?
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?