Internal rate of return Peace of Mind, Inc. (PMI) sells extended warranties for durable consumer goods. When PMI sells an extended warranty, it receives cash up front, but later PMI must cover any repair costs that arise. An analyst working for PMI is considering a warranty for a new line of big-screen TVs. A consumer who purchases the 2-year warranty will pay PMI $205. On average, the repair costs that PMI must cover will average $103 for each for the warranty's 2 years. If PMI has a cost of capital of 6%, should it sell this warranty? The internal rate of return (IRR) for this project is %. (Round to two decimal places.) The NPV of this project is $ (Round to two decimal places.) If PMI has a cost of capital of 6%, should it sell this warranty for sale? (Select the best answer below.) O A. With a cost of capital of 0.33% and an IRR of 6%, PMI should sell this warranty. O B. With a cost of capital of 0.33% and an IRR of 6%, PMI should not sell this warranty. O C. With a cost of capital of 6% and an IRR of 0.33% and a NPV of $16.16, PMI should sell this warranty. O D. With a cost of capital of 6% and an IRR of 0.33%, and and NPV of $16.16, PMI should not sell this warranty.
