Truman Industries, Inc. (TI) is considering a capital budgeting project. The appropriate discount rate for this project is 4%. The initial cost of the project will be $350,000. The project is expected to produce positive after tax cash flows of $140,000 per year for the next 6 years. Winding up of the project will produce an additional after tax positive cash flow of $200,000 in the sixth year. What are the NPV, IRR and payback for the project? Should this project be accepted? Why or why not?

Answer rating: 100% (QA)

Answer 1 NPV 54196207 2 IRR 371873 3 Payback period 250 years 4 Accept the project As NPV is signifi... View the full answer