Cirice Corporation is considering opening a branch in another state. The operating cash flow will be $150,400 a year. The projec will require new equipment costing $592,000 that would be depreciated on a straight-line basis to zero over the 6-year life of the project. The equipment will have a market value of $177,000 at the end of the project. The project requires an initial investment of $41,000 in net working capital, which will be recovered at the end of the project. The tax rate is 21 percent. What is the project's IRR?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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What is the project irr?
Circe Corporation is considering opening a branch in another state. The operating cash flow will be $150,400 a year. The project will require new equipment costing $592,000 that would be depreciated on a straight-line basis to zero over the 6-year life of the project. The equipment will have a market value of $177,000 at the end of the project. The project requires an initial investment of $41,000 in net working capital, which will be recovered at the end of the project. The tax rate is 21 percent. What is the project's IRR?
Transcribed Image Text:Circe Corporation is considering opening a branch in another state. The operating cash flow will be $150,400 a year. The project will require new equipment costing $592,000 that would be depreciated on a straight-line basis to zero over the 6-year life of the project. The equipment will have a market value of $177,000 at the end of the project. The project requires an initial investment of $41,000 in net working capital, which will be recovered at the end of the project. The tax rate is 21 percent. What is the project's IRR?
**Percentage Values**

1. **16.34%**

2. **12.33%**

3. **15.99%**

4. **15.75%**

5. **14.01%**

This image displays a series of percentage values, each associated with an empty circular marker. The percentages may represent data points in a broader statistical or survey context. For example, these could indicate the distribution of survey responses, component proportions in a study, or other quantitative metrics.

There are no additional graphs or diagrams accompanying these values.
Transcribed Image Text:**Percentage Values** 1. **16.34%** 2. **12.33%** 3. **15.99%** 4. **15.75%** 5. **14.01%** This image displays a series of percentage values, each associated with an empty circular marker. The percentages may represent data points in a broader statistical or survey context. For example, these could indicate the distribution of survey responses, component proportions in a study, or other quantitative metrics. There are no additional graphs or diagrams accompanying these values.
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