Deavyanne Johnston, the engineering manager at TZO Chemicals, is conducting an evaluation of alternatives based on ROR.

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Deavyanne Johnston, the engineering manager at TZO Chemicals, is conducting an evaluation of alternatives based on ROR. She was given the following data and told that due to the unusually large number of investment opportunities the company now has, all future projects must have a ROR that is at least 12.5% above the company€™s weighted average cost of capital on an after-tax basis. If the company€™s effective tax rate is 32%, what is the after-tax MARR she should use in her evaluation?

Amount, $ 4 million 6 million Funds Source Retained earnings Stock sales Long-term loans Budgeted funds for project Cost

MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...
Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...
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Engineering Economy

ISBN: 978-0073523439

8th edition

Authors: Leland T. Blank, Anthony Tarquin

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