Question
Assume the following for a firm that will operate for only four years. Year Zero: Capital Investment = $10M and build up operational NWC =
Assume the following for a firm that will operate for only four years. Year Zero: Capital Investment = $10M and build up operational NWC = $2M; Years 1-4: NI = $7M, Depreciation = $2M, Interest expense = $1M; Year 4: Recovery of earlier increase in NWC, and in addition Cash Flow from Salvage = $6M. Suppose the tax rate is 40% for the firm. What is the IRR based on the FCFs for this firm?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To calculate the Internal Rate of Return IRR for this firm we need to first determine the Free Cash ...
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Intermediate Financial Management
Authors: Brigham, Daves
10th Edition
978-1439051764, 1111783659, 9780324594690, 1439051763, 9781111783655, 324594690, 978-1111021573
