Question: a. Complete the spreadsheet below by estimating the project's annual after tax cash flow. b. What is the investment's net present value at a discount
b. What is the investment's net present value at a discount rate of 10 percent?
c. What is the investment's internal rate of return?
d. How does the internal rate of return change if the discount rate equals 20 percent?
e. How does the internal rate of return change if the growth rate in EBIT is 8 percent instead of 3 percent?
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Facts and Assumptions Depreciable life yrs. Expected life yrs. Salvage value $ 10 SO EBIT in year 1 28,000 Growth rate in Discount rate 3% EBIT 10% 3 5 Year 6 10 50,000 50,000| 50,000 50,000 50,000 50,000 50,000 Annual depreciation 28,000 28,840 29,705 30,596 31,514 32,460 | 33,433 34,436 35,470 36,534 EBIT
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a The following table shows the calculations for Annual AfterTax Cash Flow NPV and IRR Year 0 1 2 3 4 5 6 7 8 9 10 Initial cost 350000 Annual deprecia... View full answer
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