Question
Industrial Services is analyzing a proposed investment that would initially require $489,000 ofnew equipment. This equipment would be depreciated on a straight-line basis to a
Industrial Services is analyzing a proposed investment that would initially require $489,000 ofnew equipment. This equipment would be depreciated on a straight-line basis to a zero balanceover the four-year life of the project. The estimated salvage value is $135,000. The project requires$32,000 initially for net working capital, all of which will be recouped at the end of the project.The projected operating cash flow is $174,900 a year. What is the internal rate of return on thisproject if the relevant tax rate is 35 percent?
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