Corporate Finance
Corporate Finance
12th Edition
ISBN: 9781259918940
Author: Ross, Stephen A.
Publisher: Mcgraw-hill Education,
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Chapter 6, Problem 7QAP
Summary Introduction

Adequate information:

Purchasing price = $575,000

Useful life of the project = 5 years

Salvage value = $60,000

Saving before tax = $176,000

Reduction in working capital = $80,000

Tax rate = 23% or 0.23

To compute: The internal rate of return (IRR) of the project.

Introduction: IRR is the discounting rate that produces zero NPV, that is, the present value of aggregate cash inflows is the same as the present value of aggregate cash outflows associated with a project.

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Corporate Finance

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