The introduction of a new product will require a $400,000 investment in demonstration models, promotion, and staff training. The new product will increase annual profits by $100,000 for the first four years and $50,000 for the next four years. There will be no significant recoverable amounts at the end of the eight years. The firm's cost of capital is 13%. Calculate the expected IRR on the proposed investment in the new product. Should the new product be introduced? Why?

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The Answer of The introduction of a new product will require a $400,000 investment in demonstration models, promotion, and staff training. The new product will increase annual profits by $100,000 for the first four years and $50,000 for the next four years. There will be no significant recoverable amounts at the end of the eight years. The firm's cost of capital is 13%. Calculate the expected IRR on the proposed investment in the new product. Should the new product be introduced? Why?

The Introduction of a New Product Will Require a $400,000