Best Co. is evaluating a project that will increase annual sales by $100,000 per year and incremental cash costs by $ 60,000 per year. The project will require an investment of $125,000 in fixed assets, which can be depreciated on a straight-line to a zero book- value over the 5-year life of the project. The applicable tax rate is 25%. The company expects the fixed asset can be sold at the end of the project (year 5) for $7,500 salvage value.

Best Co. is evaluating a project that will increase annual sales by $100,000 per year and incremental cash costs by $60,000 per year. The project will require an investment of $125,000 in fixed assets, which can be depreciated on a straight-line to a zero bookvalue over the 5-year life of the project. The applicable tax rate is 25%. The company expects the fixed asset can be sold at the end of the project (year 5 ) for $7,500 salvage value. What is the IRR of the project? IRR=5.0%5.0%