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What is the annual accounting income

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The Gabriel Co. is considering a 7-year project that would require a cash outlay of $140,000 for machinery and an additional $30,000 for working capital that would be released at the end of the project. The equipment would be depreciated evenly over the 7 years and have a salvage value of $ 7,000 at the end of 7 years. The project would generate before tax annual cash inflows of $41,500. The tax rate is 20% and the company's discount rate is 12%.

Question 1: What is the annual accounting income?

Question 2: What is the annual after-tax cash flow?

Question 3: What is the payback based upon the initial cash outflows?

Question 4: What is the discounted payback based upon the initial cash outflows?

Question 5: What is the simple rate of return based upon the initial cash outflows?

Question 6: What is the net present value?

Question 7: What is the internal rate of return?

Question 8: Would you recommend this project or not? Why

Reference no: EM132779940

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