Jennifer just graduated from college. Since she is starting her own business, it's time to upgrade...
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Jennifer just graduated from college. Since she is starting her own business, it's time to upgrade from her clunker to a reliable vehicle. Jennifer has the option to purchase a new car for her business at a cost of $21,208 (life of 7 years with no salvage value), estimating that it would help her bring in additional annual net operating cash flows of $8,800 over the life of the car. Determine the simple payback period and the IRR for this investment. Jennifer expects her business income to be subject to a 30% tax rate. (Round simple payback period to 3 decimal places, e.g. 15.256 and IRR to 2 decimal places, e.g. 15.25%. Round intermediate calculations to 2 decimal places, e.g. 15.25.) Simple payback period IRR years % Jennifer just graduated from college. Since she is starting her own business, it's time to upgrade from her clunker to a reliable vehicle. Jennifer has the option to purchase a new car for her business at a cost of $21,208 (life of 7 years with no salvage value), estimating that it would help her bring in additional annual net operating cash flows of $8,800 over the life of the car. Determine the simple payback period and the IRR for this investment. Jennifer expects her business income to be subject to a 30% tax rate. (Round simple payback period to 3 decimal places, e.g. 15.256 and IRR to 2 decimal places, e.g. 15.25%. Round intermediate calculations to 2 decimal places, e.g. 15.25.) Simple payback period IRR years %
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Answer rating: 100% (QA)
To calculate the simple payback period we need to divide the initial cost of the investment by the n... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-0078025518
2nd edition
Authors: Stacey Whitecotton, Robert Libby, Fred Phillips
Posted Date:
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