Question
Garden-Grow Products is considering a new investment whose data are shown below. The equipment would be depreciated on a straight-line basis over the project's 3-year
Garden-Grow Products is considering a new investment whose data are shown below. The equipment would be depreciated on a straight-line basis over the project's 3-year life, would have a zero salvage value, and would require some additional working capital that would be recovered at the end of the project's life. Revenues and other operating costs are expected to be constant over the project's life. (Hint: Cash flows are constant in Years 1 to 3.)
Project cost of capital (r) | 10.0% |
Net investment in fixed assets (basis) | $75,000 |
Required new working capital | $15,000 |
Straight-line deprec. rate | 33.333% |
Sales revenues, each year | $75,000 |
Operating costs (excl. deprec.), each year | $25,000 |
Tax rate | 35.0% |
NPV = $23,852
Looking at the previous question, please compute the IRR, MIRR and both the payback and discounted payback.
IRR =
MIRR =
Payback =
Discounted Payback =
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started