All Exotic Rental Problems Count 4 Points Each Exotic Rental…
All Exotic Rental Problems Count 4 Points Each Exotic Rentals has four independent projects under consideration each with a required rate of return of 14%. The total projects budget is $800,000. A table showing the investments and projected free cash flows follows: NOTE: If using Excel Investments should be entered as negative numbers. Project/Year Maserati Lamborghini Ferrari BMW i8 Coupe 0 (investment) $150,380 $221,320 $286,550 $175,500 1 $40,000 $85,000 $100,000 $52,000 2 $80,000 $110,000 $125,000 $90,000 3 $60,000 $110,000 $125,000 $90,000 4 $60,000 $92,000 $125,000 $70,000 5 $95,000 $125,000 $150,000 $135,000 No additional cash flows are expected from any of the five projects after year 5. Year 5 cash flow includes rentals and auction of the exotic vehicles into the secondary car market. Which of the 4 projects has the highest IRR? The correct answer was determined using an Excel spreadsheet. Take answer to at least two decimal positions.