A firm has opportunity to invest in project having an

Reference no: EM13395624

A firm has the opportunity to invest in a project having an initial outlay of $20,000. Net cash inflows (before depreciation and taxes) are expected to be $5,000 per year for five years. The firm uses the straight-line depreciation method with a zero salvage value and has a (marginal) income tax rate of 40 percent. The firm's cost of capital is 12 percent.

a. Compute the internal rate of return and the net present value.

b. Should the firm accept or reject the project?

Reference no: EM13395624

Questions Cloud

Develop a multiple regression model with categorical : develop a multiple regression model with categorical variables that incorporate seasonality for forecasting sales using

Prepare a flowchart of the back-stage as well as the : choose a real-life service organisation that you are familiar with.prepare a flowchart of the back-stage as well as the

Prokaryotic and eukaryotic are the two main categories of : prokaryotic and eukaryotic are the two major categories of cells making up life on earth. describe the differences in

How much would be in your savings account in eight years : 1list and describe the purpose of each part of a time line with an initial cash inflow and a future cash outflow. which

A firm has opportunity to invest in project having an : a firm has the opportunity to invest in a project having an initial outlay of 20000. net cash inflows before

Define experimental design discuss the importance of : 1. what is the difference between juranrsquos definition of strategic quality management and madu and kueirsquos

Be prepared to describe how life as we know it might be : water and carbon are major components of all life. describe the characteristics of these materials which make them so

Explain what is meant by a limit order how does a stop : explain what is meant by a limit order. how does a stop order differ from a limit order and how is it similar? describe

State the function of the different brain hemispheres point : define the function of the different brain hemispheres. indicate how handedness is related to brain hemisphere

User Account

All Pages