Former Green Bay Packers defensive tackle, Don Davey, is considering opening a Firehouse Sub Shop in Wauwatosa, Wisconsin. The new Fireside Sub Shop will require new sandwich-grilling equipment costing $598,000 that would be depreciated on a straight-line basis to zero over the 5-year life of the project. The grilling equipment will be salvaged for $181,000 at the end of the project. The Sub Shop project requires an initial investment of $42,000 in net working capital, which will be recovered at the end of the project. The tax rate is 35%. What is the Firehouse Sub Shop project’s IRR if it is expected to generate an annual operating cash flow of $176,600?
Former Green Bay Packers defensive tackle, Don Davey, is considering opening a Firehouse Sub Shop in Wauwatosa, Wisconsin. The new Fireside Sub Shop will require new sandwich-grilling equipment costing $598,000 that would be
a. 13.24%
b. 18.39%
c. 18.48%
d. 16.87%
e. 15.64%
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