Question
Holly plans to open a pet-shop and to run the business for 5 years. The pet service equipment will cost $125,000. Holly expects after-tax cash
Holly plans to open a pet-shop and to run the business for 5 years. The pet service equipment will cost $125,000. Holly expects after-tax cash flows to be $35,000 a year and her required rate of return is 10%.
a) What is the payback period for her project? (2 marks)
b) What is the discounted payback period? (2 marks)
c) What is the IRR of her project? Should she go ahead with it?
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a Payback Period To calculate the payback period we divide the initial investment by the annual afte...
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Introduction To Management Science A Modeling And Cases Studies Approach With Spreadsheets
Authors: Frederick S. Hillier, Mark S. Hillier
5th Edition
978-0077825560, 78024064, 9780077498948, 007782556X, 77498941, 978-0078024061
