Question

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 percentage terms
without the percent sign symbol and round to the second decimal
place. (Thus, 12.98756% would be written as 12.99 to be
correct)

- Net investment cost (depreciable basis) = $140,000
- Straight-line depreciation rate = 20.00% per year
- Cash Sales revenues, each year = $71,000
- Annual cash operating costs (excluding depreciation) = $25,000
- Tax rate = 22.0%

Answer #1

**IRR of the project is 15.28**

Below is the image showing calculation of IRR

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...

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...

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...

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 NPV? Do not
round the intermediate calculations and round...

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 NPV? Do not round the
intermediate calculations and round...

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shown below. The equipment that would be used has a 3-year tax
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operating working capital would be required. Revenues and other
operating costs are expected to be constant over the project's
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intermediate calculations and round...

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A firm is considering a new investment whose data are shown
below. The equipment would be depreciated on a straight-line basis
over the project's 3-year life, would have a zero salvage value,
and would require additional net operating working capital that
would be recovered at the end of the project's life. Revenues and
other operating costs are expected to be constant over the
project's life. What is the project's NPV ( no decimal places)
(Hint: Cash flows from operations are...

A firm is considering a new investment whose data are shown
below. The equipment would be depreciated on a straight-line basis
over the project's 3-year life, would have a zero salvage value,
and would require additional net operating working capital that
would be recovered at the end of the project's life. Revenues and
other operating costs are expected to be constant over the
project's life. What is the project's NPV ( no decimal
places) (Hint: Cash flows from operations are constant...

A firm is considering a new investment whose data are shown
below. The equipment would be depreciated on a straight-line basis
over the project's 3-year life, would have a zero salvage value,
and would require additional net operating working capital that
would be recovered at the end of the project's life. Revenues and
other operating costs are expected to be constant over the
project's life. What is the project's NPV ( no decimal
places) (Hint: Cash flows from operations are constant...

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