Assume the following about a new smoothie shop you are going to open: 1. In order...
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Assume the following about a new smoothie shop you are going to open: 1. In order to open the shop you need to buy $400,000 of equipment and furniture purchased today 2. You expect annual revenue of $300,000 and annual operating expenses of $150,000. Your tax rate is 25%. 3. You close the shop after 7 years and sell the equipment (which then has a depreciated tax value of $0) for $50,000. 4. Your WACC is 10% 5. The 10 year Treasury rate is 4% What is the IRR? Round to nearest %; form of correct answer would be 25%. Assume the following about a new smoothie shop you are going to open: 1. In order to open the shop you need to buy $400,000 of equipment and furniture purchased today 2. You expect annual revenue of $300,000 and annual operating expenses of $150,000. Your tax rate is 25%. 3. You close the shop after 7 years and sell the equipment (which then has a depreciated tax value of $0) for $50,000. 4. Your WACC is 10% 5. The 10 year Treasury rate is 4% What is the IRR? Round to nearest %; form of correct answer would be 25%.
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To calculate the Internal Rate of Return IRR for this investment we need to determine the discount r... 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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