Determine the inflation-free irr of the computer system

Assignment Help Financial Management

Reference no: EM131907723

"A firm is considering purchasing a computer system.

-Cost of system is $176,000. The firm will pay for the computer system in year 0.

-Project life: 5 years

-Salvage value in year 0 (constant) dollars: $11,000

-Depreciation method: five-years MACRS

-Marginal income-tax rate = 36% (remains constant over time)

-Annual revenue = $138,000 (year-0 constant dollars)

-Annual expenses (not including depreciation) = $78,000 (year-0 constant dollars)

If the general inflation rate is 3.2% during the project period (which will affect all revenues, expenses, and the salvage value but not depreciation), determine the INFLATION-FREE IRR' of the computer system. Enter your answer as a percentage between 0 and 100."

Reference no: EM131907723

Questions Cloud

Solve given test on child development : Child Development 1. If researchers want to keep the attention of 8 week old infants, they would use these colors.

Explain how the given sub-claims relate to the main claim : Describe the author's argument, and what you see as his most important or interesting sub-claims, explaining how these sub-claims relate to the main claim.

Evaluate different supply chain strategies : Identify a strategy for each city and explain why you feel the strategy will result in optimal performance and give your company a competitive advantage

What is present value of six-year annuity : What is the present value of a 6-year annuity of $2,000 per period in which payments come at the beginning of each period?

Determine the inflation-free irr of the computer system : A firm is considering purchasing a computer system. determine the INFLATION-FREE IRR' of the computer system.

What goal do you hope to accomplish with the given essay : Your goal is the end result that you wish to achieve in writing the critical analysis essay. What goal do you hope to accomplish with this essay?

Simulator and set a break point : Can you go through the entire program in detailed explanations, and also include how to load it in the simulator and set a break point?

Highest populated cities in descending order : a. Select the top 10 highest populated cities in descending order b. Select the top 10 lowest populated cities in ascending order

Morgan uses the net present value method : Morgan uses the net present value method and has a discount rate of 12%. Will Morgan accept the project?

User Account

All Pages