Calculate the IRR, WACC, MCC, and average rate of return.
	General Electric
	Estimated Cash Flows
	Year
	1	2	3	4	5
Expected Sales	$ 850,000	$ 850,000	$ 850,000	$ 850,000	$ 850,000
Direct Cost = 45%	$ (467,500)	$ (467,500)	$ (467,500)	$(467,500)	$(467,500)
Indirect Cost	$ (50,000)	$ (50,000)	$ (50,000)	$ (50,000)	$ (50,000)
Depreciation	$ (85,000)	$ (85,000)	$ (85,000)	$ (85,000)	$ (85,000)
Profit Before Tax	$ 247,500	$ 247,500	$ 247,500	$ 247,500	$ 247,500
Less Tax = 35%	$ (86,625)	$ (86,625)	$ (86,625)	$ (86,625)	$ (86,625)
Profit After Tax	$ 160,875	$ 160,875	$ 160,875	$ 160,875	$ 160,875
Add: Depreciation	$ 85,000	$ 85,000	$ 85,000	$ 85,000	$ 85,000
Net Cash Flow	$ 245,875	$ 245,875	$ 245,875	$ 245,875	$ 245,875

Server Total (straight line depreciation over 5 years): $425,000.00

Discount 15%

The company is expected to make $850,000.00 each year. Direct costs will be 45% of their expected sales and tax will be 35%.

Answer rating: 100% (QA)

To calculate the IRR WACC MCC and average rate of return we need to first calculate the cash flows f... View the full answer