Compute the project after-tax cash flow

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Reference no: EM131348620

The following is a simplified project income statement for Ma & Pa Incorporated. The project is expected to last for eight years. Its up-front cost is $2,000. Its cost of capital is 12 percent.

Sales $ 925.00

– cash expenses 310.00

– depreciation 250.00

Earnings before taxes $ 365.00

– taxes (at 35%) 127.75

Net income $ 237.25

a. Compute the project’s after-tax cash flow.

b. Compute and interpret the project’s NPV, IRR, profitability index, and payback period.

Reference no: EM131348620

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