Solution-What is the internal rate of return of remodeling

What is the internal rate of return of remodeling project

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Reference no: EM132764501

The Boston Culinary Institute is evaluating a classroom remodeling project. The cost of the remodel will be $350,000 and will be depreciated over six years using the straight-line method. The remodeled room will accommodate five extra students per year.

Additional information relating to the project follows:

Cost of the remodel project $ 350,000

Useful life of project in years 6

Annual number of extra accommodated students 5

Annual tuition per student $ 22,000

Before-tax incremental cost of a student $ 2,000

Company's income tax rate 20%

Required rate of return 12%

Problem 1: Assuming a six-year time horizon, what is the internal rate of return of the remodeling project?

Reference no: EM132764501

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What is the internal rate of return of remodeling project

Reference no: EM132764501

Reference no: EM132764501

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