Question
Consider the following investment options for LMN Ltd. The companys cost of capital is 9%, and the corporate tax rate is 30%. Option 1 Option
Consider the following investment options for LMN Ltd. The company’s cost of capital is 9%, and the corporate tax rate is 30%.
Option 1 | Option 2 | |
Initial Cost | $1,000,000 | $1,500,000 |
Useful Life | 3 years | 4 years |
Annual Earnings before Depreciation & Tax | $350,000 | $500,000 |
Depreciation | Straight-line | Straight-line |
You are required to compute:
- Payback period.
- Net Present Value (NPV).
- Internal Rate of Return (IRR).
- Discounted Payback Period.
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College Algebra With Modeling And Visualization
Authors: Gary Rockswold
6th Edition
0134418042, 978-0134418049
