A retail store is hoping that a new marketing campaign will improve their store sales. Given the
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Question:
| A retail store is hoping that a new marketing campaign will improve their store sales. | |||||||
| Given the schedule of annual incremental cash flows shown below, calculate the NPV and IRR of this project. | |||||||
| Assume the company's average tax rate is 25% and cost of capital is 4.6%. | |||||||
| Year 0 | $ (4,400) | ||||||
| Year 1 | 1800 | ||||||
| Year 2 | 1350 | ||||||
| Year 3 | 1013 | ||||||
| Year 4 | 760 | ||||||
| Year 5 | 570 | ||||||
| Year 6 | 1800 |
What is the net present value (NPV) of this project?
What is the internal rate of return (IRR) of this project?
Should the company pursue the project?
Expert Answer:
To calculate the Net Present Value NPV and Internal Rate of Return IRR of the project we need to dis... View the full answer
Related Book For 
Fundamentals of corporate finance
ISBN: 978-0470876442
2nd Edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
Posted Date:
