Question

Cirice Corp. is considering opening a branch in another state. The operating cash flow will be...

Cirice Corp. is considering opening a branch in another state. The operating cash flow will be $147,600 a year. The project will require new equipment costing $547,000 that would be depreciated on a straight-line basis to zero over the 6-year life of the project. The equipment will have a market value of $147,000 at the end of the project. The project requires an initial investment of $33,500 in net working capital, which will be recovered at the end of the project. The tax rate is 40 percent. What is the project's IRR?

a.. 15.97%

b. 16.80%

c.18.18%

d. 14.53%

e.18.13%

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

b. 16.80%

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Cirice Corp. is considering opening a branch in another state. The operating cash flow will be...
Cirice Corp. is considering opening a branch in another state. The operating cash flow will be $197400 a year. The project will require new equipment costing $5,000 that would be depreciated on a straight-line basis to zero over the 4-year life of the project. The equipment will have a market value of $143,000 at the end of the project. The project requires an initial investment of $32,500 in net working capital, which will be recovered at the end of the...
Cirice Corp. is considering opening a branch in another state. The operating cash flow will be...
Cirice Corp. is considering opening a branch in another state. The operating cash flow will be $176,600 a year. The project will require new equipment costing $598,000 that would be depreciated on a straight-line basis to zero over the 5-year life of the project. The equipment will have a market value of $181,000 at the end of the project. The project requires an initial investment of $42,000 in net working capital, which will be recovered at the end of the...
Cirice Corp. is considering opening a branch in another state. The operating cash flow will be...
Cirice Corp. is considering opening a branch in another state. The operating cash flow will be $132,900 a year. The project will require new equipment costing $556,000 that would be depreciated on a straight-line basis to zero over the 6-year life of the project. The equipment will have a market value of $153,000 at the end of the project. The project requires an initial investment of $35,000 in net working capital, which will be recovered at the end of the...
Cirice Corp. is considering opening a branch in another state. The operating cash flow will be...
Cirice Corp. is considering opening a branch in another state. The operating cash flow will be $165,300 a year. The project will require new equipment costing $583,000 that would be depreciated on a straight-line basis to zero over the 6-year life of the project. The equipment will have a market value of $171,000 at the end of the project. The project requires an initial investment of $39,500 in net working capital, which will be recovered at the end of the...
Lakeside Winery is considering expanding its wine-making operations. The expansion will require new equipment costing $633,257...
Lakeside Winery is considering expanding its wine-making operations. The expansion will require new equipment costing $633,257 that would be depreciated on a straight-line basis to a zero balance over the four-year life of the project. The estimated salvage value is $199,091. The project requires $35,622 initially for net working capital, all of which will be recovered at the end of the project. The projected operating cash flow is $202,005 a year. What is the net present value of this project...
Wellpoint Company is considering an investment project that will produce an operating cash flow of $415,200...
Wellpoint Company is considering an investment project that will produce an operating cash flow of $415,200 a year for five years. The initial cash outlay for equipment will be $1,027,000. An aftertax salvage value of $82,160 for the equipment will be received at the end of the project. The project requires $154,050 of net working capital that will be fully recovered. What is the net present value of the project if the required rate of return is 14 percent? $388,174.80...
Winter Tyme, Inc., produces coats and jackets for the Seattle market. The company is considering a...
Winter Tyme, Inc., produces coats and jackets for the Seattle market. The company is considering a new 3-year expansion project into the Portland market. The expansion requires an initial investment of $1.458 million in new plant and equipment. These assets will be depreciated straight-line to zero over its 3-year tax life, after which time the assets can be sold for $113,400. The expansion also requires an initial investment in net working capital of $162,000, but this investment will be recovered...
Big Machines is considering a 4-year project with an initial cost of $1,000,000. The project will...
Big Machines is considering a 4-year project with an initial cost of $1,000,000. The project will not directly produce any sales but will reduce operating costs by $325,000 a year. The equipment is depreciated straight-line to a zero book value over the life of the project. At the end of the project the equipment will be sold for an estimated $125,000. The tax rate is 30%. The project will require $100,000 in extra inventory for spare parts and accessories. Which...
Using Excel (if applicable), Grangier Investment Co is considering a new investment in a project whose...
Using Excel (if applicable), Grangier Investment Co is considering a new investment in a project whose data are shown below. The equipment would be fully depreciated on a straight-line basis over the project's 3-year life and would require additional net operating working capital that would be recovered at the end of the project's life. The company owns the building where this equipment will be operational. The company currently has an offer from a competitor to buy said building for $100,000...
Cookie Cutter Corp. is considering a new project whose data are shown below. The equipment that...
Cookie Cutter Corp. is considering a new project whose data are shown below. The equipment that would be used has a 5-year tax life, would be depreciated by the straight-line method over its 5-year life, and would have a zero salvage value. No change in net operating working capital would be required. Revenues and other operating costs are expected to be constant over the project's 5-year life. What is the project's IRR? Do not round the intermediate calculations. State in...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT