Former Green Bay Packers defensive tackle, Don Davey, is considering opening a Firehouse Sub Shop in Wauwatosa, Wisconsin. The new Fireside Sub Shop will require new sandwich-grilling equipment costing $550,000 that would be depreciated on a straight-line basis to zero over the 4-year life of the project. The grilling equipment will be salvaged for $149,000 at the end of the project. The Sub Shop project requires an initial investment of $34,000 in net working capital, which will be recovered at the end of the project. The tax rate is 34%. What is the Firehouse Sub Shop projects IRR if it is expected to generate an annual operating cash flow of $179,800?

Multiple Choice

• 13.85%

• 16.63%

• 10.70%

• 15.39%

• 18.77%