Cirice Corp. is considering opening a branch in another state. The operating cash flow will be $187,600 a year. The project will require new equipment costing $613,000 that would be depreciated on a straight- line basis to zero over the 5-year life of the project. The equipment will have a market value of $191,000 at the end of the project. The project requires an initial investment of $44,500 in net working capital, which will be recovered at the end of the project. The tax rate is 35 percent. What is the project's IRR? Multiple Choice 19.80% 14.59% 16.96% 19.86% 18.18%
Cirice Corp. is considering opening a branch in another state. The operating cash flow will be $187,600 a year. The project will require new equipment costing $613,000 that would be depreciated on a straight- line basis to zero over the 5-year life of the project. The equipment will have a market value of $191,000 at the end of the project. The project requires an initial investment of $44,500 in net working capital, which will be recovered at the end of the project. The tax rate is 35 percent. What is the project's IRR? Multiple Choice 19.80% 14.59% 16.96% 19.86% 18.18%
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 2PB: Markoff Products is considering two competing projects, but only one will be selected. Project A...
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