Problem:
Hathaway Inc, a resort company, is refurbishing one of its hotels at a cost of $7.8 millios. Managements expects that this will lead to additional cash flows of $1.8 million for the next 6 years.
Required:
Question 1: What is the IRR of the project?
Question 2: If appropriate cost of capital is 12 percent, should Hathaway go ahead with this project?
Note: Please show basic calculation