# Your company is considering the purchase of an evolutionary piece of equipment. This equipment would increase sales by $90,000 each year for nine years. The use of this equipment would increase annual costs by $25,000 and the equipment would be

Your company is considering the purchase of an evolutionary piece of equipment. This equipment would increase sales by $90,000 each year for nine years. The use of this equipment would increase annual costs by $25,000 and the equipment would be depreciated straight line over the useful life of nine years.

- Assuming a tax rate of 21%, calculate net income.
- Calculate the Operating Cash Flow for the project.
- Assuming the project has an initial cost of $300,000 and lasts nine years, calculate the NPV of the project assuming a required rate of return of 10%.
- Calculate the Internal Rate of Return on the project.
- Should you accept or reject this project?

- Expert Answer

## To answer your questions we need to calculate several financial metrics based on the given informati View the full answer

**Related Book For**

## Financial Reporting Financial Statement Analysis and Valuation a strategic perspective

ISBN: 978-1337614689

9th edition

Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Cannot find your solution?

Post a FREE question now and get an answer within minutes*.

### Related Video

Internal rate of return is a method of calculating an investment’s rate of return. The term internal refers to the fact that the calculation excludes external factors, such as the risk-free rate, inflation, the cost of capital, or financial risk.