A project has an initial requirement of $698,700 for fixed assets and $61,000 for net working capital.

Question:

A project has an initial requirement of $698,700 for fixed assets and $61,000 for net working capital. The fixed assets will be depreciated to a zero book value over the four-year life of the project and will be worthless at the end of the project. All of the net working capital will be recouped after four years. The expected annual operating cash flow is $218,000. What is the project's if the tax rate is 35 percent?
a) 7.72 percent
b) 8.41 percent
c) 8.69 percent
d) 9.11 percent
e) 9.97 percent
Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment...