The IRR ( Internal rate of return ) of the project.

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Answer 1

Question

Chapter 12, Problem 32QP

a)

Summary Introduction

To determine: The IRR (Internal rate of return) of the project.

b)

Summary Introduction

To determine: The cost of capital of the project.

c)

Summary Introduction

To determine: Whether the project should be accepted or rejected decision using NPV and IRR are matched.

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Crenshaw, Incorporated, is considering the purchase of a $367,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method. The market value of the computer will be $67,000 in five years. The computer will replace five office employees whose combined annual salaries are $112,000. The machine will also immediately lower the firm's required net working capital by $87,000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 22 percent. The appropriate discount rate is 15 percent. Calculate the NPV of this project. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. NPV Answer is complete but not entirely correct. S 103,141.80

Your firm is contemplating the purchase of a new $610,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $66,000 at the end of that time. You will save $240,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $81,000 (this is a one-time reduction). If the tax rate is 21 percent, what is the IRR for this project? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. IRR %

Answer 2

Question

Chapter 12, Problem 32QP

a)

Summary Introduction

To determine: The IRR (Internal rate of return) of the project.

b)

Summary Introduction

To determine: The cost of capital of the project.

c)

Summary Introduction

To determine: Whether the project should be accepted or rejected decision using NPV and IRR are matched.

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Answer 3

Question

Chapter 12, Problem 32QP

a)

Summary Introduction

To determine: The IRR (Internal rate of return) of the project.

b)

Summary Introduction

To determine: The cost of capital of the project.

c)

Summary Introduction

To determine: Whether the project should be accepted or rejected decision using NPV and IRR are matched.

Expert Solution & Answer

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Answer 4

Question

Chapter 12, Problem 32QP

a)

Summary Introduction

To determine: The IRR (Internal rate of return) of the project.

b)

Summary Introduction

To determine: The cost of capital of the project.

c)

Summary Introduction

To determine: Whether the project should be accepted or rejected decision using NPV and IRR are matched.

Expert Solution & Answer

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Answer 5

Chapter 12, Problem 32QP

a)

Summary Introduction

To determine: The IRR (Internal rate of return) of the project.

b)

Summary Introduction

To determine: The cost of capital of the project.

c)

Summary Introduction

To determine: Whether the project should be accepted or rejected decision using NPV and IRR are matched.

Answer 6

Chapter 12, Problem 32QP

a)

Summary Introduction

To determine: The IRR (Internal rate of return) of the project.

Answer 7

Chapter 12, Problem 32QP

a)

Summary Introduction

To determine: The IRR (Internal rate of return) of the project.

Answer 8

b)

Summary Introduction

To determine: The cost of capital of the project.

Answer 9

b)

Summary Introduction

To determine: The cost of capital of the project.

Answer 10

c)

Summary Introduction

To determine: Whether the project should be accepted or rejected decision using NPV and IRR are matched.

Answer 11

c)

Summary Introduction

To determine: Whether the project should be accepted or rejected decision using NPV and IRR are matched.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 12 - Prob. 1QP Ch. 12 - Prob. 2QP Ch. 12 - Prob. 3QP Ch. 12 - Prob. 4QP Ch. 12 - Prob. 7QP Ch. 12 - Prob. 8QP Ch. 12 - Prob. 9QP Ch. 12 - Prob. 10QP Ch. 12 - Prob. 11QP Ch. 12 - Prob. 12QP

The IRR ( Internal rate of return ) of the project.

To determine: The IRR (Internal rate of return) of the project.

To determine: The cost of capital of the project.

To determine: Whether the project should be accepted or rejected decision using NPV and IRR are matched.

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Chapter 12 Solutions