Linda just graduated from college. Since she is starting her own business, it's time to upgrade from her clunker to a reliable vehicle. Linda has the option to purchase a new car for her business at a cost of $31,416 (life of 7 years with no salvage value), estimating that it would help her bring in additional annual net operating cash flows of $7,700 over the life of the car. Determine the simple payback period and the IRR for this investment. Linda expects her business income to be subject to a 30% tax rate. (Round simple payback period to 3 decimal places, eg. 15.256 and IRR to 2 decimal places, eg. 15.25%. Round intermediate calculations to 2 decimal places, eg. 15.25.) Simple payback period IRR years
Linda just graduated from college. Since she is starting her own business, it's time to upgrade from her clunker to a reliable vehicle. Linda has the option to purchase a new car for her business at a cost of $31,416 (life of 7 years with no salvage value), estimating that it would help her bring in additional annual net operating cash flows of $7,700 over the life of the car. Determine the simple payback period and the IRR for this investment. Linda expects her business income to be subject to a 30% tax rate. (Round simple payback period to 3 decimal places, eg. 15.256 and IRR to 2 decimal places, eg. 15.25%. Round intermediate calculations to 2 decimal places, eg. 15.25.) Simple payback period IRR years
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Munabhai
Transcribed Image Text:Linda just graduated from college. Since she is starting her own business, it's time to upgrade from her clunker to a reliable vehicle.
Linda has the option to purchase a new car for her business at a cost of $31,416 (life of 7 years with no salvage value), estimating that it
would help her bring in additional annual net operating cash flows of $7,700 over the life of the car.
Determine the simple payback period and the IRR for this investment. Linda expects her business income to be subject to a 30% tax
rate. (Round simple payback period to 3 decimal places, eg. 15.256 and IRR to 2 decimal places, eg. 15.25%. Round intermediate calculations
to 2 decimal places, eg. 15.25.)
Simple payback period
IRR
years
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