Answer:
a) 13.704%
b) 3.704%
Step-by-step explanation:
Development of composite snowboard = 4 years
Total cost / investment = 250,000 * 4 = $1,000,000
Annual cash flows ; $200,000 for 10 years
discount rate = 10%
cash flow at t = 0 = ( Total cost / investment ) = - $1,000,000
a) calculate the IRR for the snow board
attached below is the calculation using online tool
IRR = 13.704%
b) maximum deviation allowable in cost of capital
maxi deviation = IRR - r
= 13.704% - 10% = 3.704%