Question: Ch 14 1.38 points Use the following data to answer the next THREE questions: Molly is considering opening a Campus Delivery business. The initial investment

 Ch 14 1.38 points Use the following data to answer the

next THREE questions: Molly is considering opening a Campus Delivery business. The

Ch 14 1.38 points Use the following data to answer the next THREE questions: Molly is considering opening a Campus Delivery business. The initial investment for the business is $200,000, which includes purchasing delivery vehicles and other investments. For tax purposes, the projected salvage value of the delivery vehicles is $62,000. The government requires depreciating the vehicles using the straight-line method over the business's life of 5 years. Molly is trying to estimate the net cashflows after tax for this business. She has already figured out that the business will generate an annual after-tax cash inflow of $54,000 from the operation. She now needs your help to estimate the net cash inflow that she will receive from selling the delivery vehicles at the end of 5 years. eBook References 1. In the best-case scenario, Molly can sell the vehicles at the end of 5 years for $91,000. Assuming the tax rate of 25%, what is the net after-tax cashflow Molly will receive from selling her delivery vehicles at the end of 5 years? O $7,250 O $91,000 O $54,750 O $98,250 O $83,750 2. In the worst-case scenario, Molly can sell the vehicles at the end of 5 years for $37,000. Assuming the tax rate of 25%, what is the net after-tax cashflow Molly will receive from selling her delivery vehicles at the end of 5 years? O $68,250 O $43,250 O $37,000 O $6,250 O $30,750 14 U$91,000 O $54,750 O $98.250 O $83,750 1.38 points eBook 2. In the worst-case scenario, Molly can sell the vehicles at the end of 5 years for $37,000. Assuming the tax rate of 25%, what is the net after-tax cashflow Molly will receive from selling her delivery vehicles at the end of 5 years? O $68,250 References $43,250 O $37,000 O $6,250 O $30,750 3. Molly is very optimistic about the sale of the delivery vehicles, and thinks that the best-case scenario of selling them for $91,000 will happen. Under this assumption, what is the Internal Rate of Return (IRR) for Molly's delivery business? O 20.19% O 11.76% 19.04% O 19.62% O 16.55%

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!