Toy Town Is Considering a New Toy That Will Cost

Multiple Choice

Toy Town is considering a new toy that will cost $49,100 in startup costs.The toy is expected to produce cash flows of $47,500 in Year 1 and $18,600 in Year 2.The toy will be discontinued after the second year.The discount rate assigned to the toy is 14.9 percent.Should the toy be produced? What is the IRR?

A) Yes;26.65%
B) Yes;41.79%
C) Yes;38.03%
D) No;26.65%
E) No;41.79%