Question
GuSont Inc. was considering an investment in the following project: Required initial investment $ 860,000 Net annual after-tax cash inflow $ 160,000 Annual depreciation expense
GuSont Inc. was considering an investment in the following project:
| Required initial investment | $ | 860,000 | |
| Net annual after-tax cash inflow | $ | 160,000 | |
| Annual depreciation expense (($860,000 $161,000)/15 years) | $ | 46,600 | |
| Estimated salvage value | $ | 161,000 | |
| Life of the project in years | 15 | ||
The internal rate of return (IRR) is (Note: to solve this problem students will need access either to Appendix C, Table 2 (Chapter 12):
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Advanced Accounting
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
14th Edition
1260247821, 978-1260247824
