Compute the internal rate of return and net present value

Reference no: EM13200538

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 has a marginal income-tax rate of 40%. The firm's cost of capital is 12%. Compute the internal rate of return and the net present value. Should the firm accept or reject the project.

Reference no: EM13200538

Questions Cloud

True of neuron : Which of the following is NOT true of neuron?

To determine the effective annual interest rate : Picabo borrows $1,000. To repay the amount she makes 12 equal monthly payments of $90.30. Determine the effective monthly interest rate.

Home environment : Why and how do tourists develop and/or resort to stereotypes while traveling away from their home environment?

Best characterize china today : Which of the following BEST characterize China today?

Compute the internal rate of return and net present value : 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 has a marginal income-tax rate of 40%.

State the nicotine absorb is converted into cotinine : When people smoke, the nicotine they absorb is converted into cotinine, which can be measured. A random sample of 40 smokers is selected, and they are found to have a mean cotinine level of 172.5

Which banking service provides easy access to money : Which banking service provides easy access to money, monthly statements, easier bill payment,or more security than carrying cash.

Determine the amount of mr. holts bonus : Determine the amount of Mr. Holt's bonus if the original computation of net present value were based on $90,000 versus $70,000 and Speculate about the long-term effect the bonus plan is likely to have on the company.

What has the action to do with regulation and coase theorem : In 2003, conservation groups paid western cattlemen to move their herds away from wild buffalo herds so that the buffalo would have more feed and not have to compete with the cattle. What has this action to do with regulation and the Coase Theorem..

User Account

All Pages