Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

https://drive.google.com/file/d/1kESsB506gAvGS220UhscX1rwAmdScp3q/view?usp=sharing Please help me solve this NPV and IRR spreadsheet! (Downloadable Excel file can be found through the Google Drive link) Chapter 7 Problem 12

image text in transcribed

https://drive.google.com/file/d/1kESsB506gAvGS220UhscX1rwAmdScp3q/view?usp=sharing

Please help me solve this NPV and IRR spreadsheet! (Downloadable Excel file can be found through the Google Drive link)

image text in transcribed
Chapter 7 Problem 12 a). Complete the spreadsheet below by estimating the project's annual after tax cash flow. b). What is the investment's net present value at a discount rate of 10 percent? c). What is the investment's internal rate of return? d). How does the internal rate of return change if the discount rate equals 20 percent? e). How does the internal rate of return change if the growth rate in EBIT is 8 percent instead of 3 percent? Facts and Assumptions Equipment initial cost $ $ 350,000 Depreciable life yrs. Expected life yrs. 10 Salvage value $ $0 Straight line depreciation EBIT in year 1 28,000 Tax rate 38% Growth rate in EBIT 3% Discount rate 10% Year 0 1 2 3 4 5 6 7 8 9 10 Initial cost 350,000 Annual depreciation 50,000 50,000 50,000 50,000 50,000 50,000 50,000 EBIT 28,000 28,840 29,705 30,596 31,514 32,460 33,433 34,436 35,470 36,534 Net present value @ 10% Internal rate of return

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduction to Finance Markets, Investments and Financial Management

Authors: Ronald W. Melicher, Edgar A. Norton

16th edition

1119398282, 978-1-119-3211, 1119321115, 978-1119398288

More Books

Students also viewed these Finance questions

Question

identify the major consequences of burnout, boredom and engagement;

Answered: 1 week ago