Using accelerated depreciation

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Reference no: EM132037266

1. Maxwell Feed & Seed is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC (and even negative), in which case it will be rejected.

Year 0 1 2 3 4 5

Cash flows -$9,500 $2,000 $2,025 $2,050 $2,075 $2,100

A. 2.31% B. 3.10% C. 2.57% D. 2.08% E. 2.82%

2. Using accelerated depreciation (MACRS) rather than straight line depreciation, increases the NPV of the project

A) True

B) False

3. Taxes paid on salvaged assets, tax rate x (Salvage value - Book Value), _____ if the salvaged value increases.

A) Increases

B) Decreases

C) Do not change

Reference no: EM132037266

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