Question: in the appropriate cells determine the net present value (NPV) and internal rate of return (IRR) for the project Case 2 Tahoe Inc. Net Present

in the appropriate cells determine the net present value (NPV) and internal rate of return (IRR) for the project

Case 2 Tahoe Inc. Net Present Value Internal Rate of Return (IRR) Q. 12 Would you invest & why? % Cost of Goods Sold Tax Rate Equipment Purchase Price $ 1,500,000 Discount Rate 10.0% Useful Life 7 years (aka Cost of Capital) Salvage Value $ 150,000 1 2 3 4 5 6 7 2018 2019 2020 2021 2022 2023 2024 2025 Revenue $ 700,000 $840656 $ 1,009575 $1212436 $1456059 $1,748635 $2100,000 Cost of Goods Sold 455000 546426 656,224 788,083 946,438 1136613 1,365,000 Gross Profit 245000 294230 353,351 424 352 509,621 612,022 735,000 Operating Costs 90,000 134,000 178,000 222,000 266,000 310,000 354,000 Depreciation 420,000 302,400 217,728 156,764 112,870 81,267 58,512 Earnings before Tax (265,000) (142,170) (42 377) 45588 130,750 220,756 322,488 Taxation (79.500) (42651) (12.713) 13,676 39,225 66,227 96,746 Net Income $(185500) $(99519) $ (29664) $ 31912 91525 154529 225742 Purchase Price Free Cash Flow 234500 202,881 188,064 188,676 204,395 235795 284 254

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