The Barby Division at Mattel Toys is considering the acquisition of a laser tattoo applicator that will be able to add custom-designed tattoos to the Barby doll.The machine costs $300M.The addition of tattoos to the iconic toy is expected to increase demand and raise free cash flow by $90 million over the next five years (at the end of each year).The machine has no anticipated resale value in five years.What is the project's IRR?

Question

Quizplus · Accepted Answer

Using a financial calculator:CF0 = -300, C01 = 90, F01 = 5, IRR CPT = 15.24%

The Barby Division at Mattel Toys Is Considering the Acquisition