Cirice Corp. is considering opening a branch in another state. The operating cash flow will be $187,600 a year. The project will require new equipment costing $613,000 that would be depreciated on a straight- line basis to zero over the 5-year life of the project. The equipment will have a market value of $191,000 at the end of the project. The project requires an initial investment of $44,500 in net working capital, which will be recovered at the end of the project. The tax rate is 35 percent. What is the project's IRR? Multiple Choice 19.80% 14.59% 16.96% 19.86% 18.18%
Cirice Corp. is considering opening a branch in another state. The operating cash flow will be $187,600 a year. The project will require new equipment costing $613,000 that would be depreciated on a straight- line basis to zero over the 5-year life of the project. The equipment will have a market value of $191,000 at the end of the project. The project requires an initial investment of $44,500 in net working capital, which will be recovered at the end of the project. The tax rate is 35 percent. What is the project's IRR? Multiple Choice 19.80% 14.59% 16.96% 19.86% 18.18%
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 4P
Related questions
Question
![Cirice Corp. is considering opening a branch
in another state. The operating cash flow
will be $187,600 a year. The project will
require new equipment costing $613,000
that would be depreciated on a straight-
line basis to zero over the 5-year life of the
project. The equipment will have a market
value of $191,000 at the end of the project.
The project requires an initial investment of
$44,500 in net working capital, which will be
recovered at the end of the project. The tax
rate is 35 percent. What is the project's IRR?
Multiple Choice
19.80% 14.59% 16.96% 19.86% 18.18%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff3daee3e-7c84-48b3-93af-4f3de024f989%2Fc88eb9a3-7b01-4012-b788-8c50635bc5b6%2F4mzrj2b_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Cirice Corp. is considering opening a branch
in another state. The operating cash flow
will be $187,600 a year. The project will
require new equipment costing $613,000
that would be depreciated on a straight-
line basis to zero over the 5-year life of the
project. The equipment will have a market
value of $191,000 at the end of the project.
The project requires an initial investment of
$44,500 in net working capital, which will be
recovered at the end of the project. The tax
rate is 35 percent. What is the project's IRR?
Multiple Choice
19.80% 14.59% 16.96% 19.86% 18.18%
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