The capital budgeting director of Sparrow Corporation is evaluating a project that costs p200,000, is expected to last for 10 years, and produces after-tax cash flows, including depreciation, of p44,503 per year. if the firm's cost of capital is 14% and its tax rate is 40 percent, what is the project's IRR?

Intermediate Algebra
19th Edition
ISBN:9780998625720
Author:Lynn Marecek
Publisher:Lynn Marecek
Chapter12: Sequences, Series And Binomial Theorem
Section12.3: Geometric Sequences And Series
Problem 12.58TI: What is the total effect on the economy of a government tax rebate of $500 to each household in...
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The capital budgeting director of Sparrow Corporation is evaluating a project that costs p200,000, is expected to last for 10 years, and produces after-tax cash flows, including depreciation, of p44,503 per year. if the firm's cost of capital is 14% and its tax rate is 40 percent, what is the project's IRR?

Suggested answer is 18%

In good accounting form, how 18% get?

 

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