Question
financial management exercise : while analyzing the investment project P , we come across the following information: * invested capital: 900 of equipment with linear
financial management exercise : while analyzing the investment project P , we come across the following information: * invested capital: 900 of equipment with linear depreciation over a 5 years period * life span : 5 years * residual value , free of taxes, by the end if year 5 = 10 The forecasted data are as follows year 1 2 to 5 turnover before taxes 900 1200 variable operating expenses 360 480 fixed operating expenses( less depreciation) 300 300
1) calculate the forecasted net cash flows of the project ( corporate tax rate = 33.33%)
2) calculate the NPV , IRR , and the payback period knowing that the required rate of return is 8% .
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