LO w N oooo 1 Year 0 1 2 3 4 5 2 Revenues 13,000 13,000 13,000 13,000 0 3 Costs of Goods Sold 5,500 5,500 5,500 5,500 0 4 Gross Profit 7,500 7,500 7,500 7,500 0 5 Selling, General, and Administrative 2,800 2,800 2,800 2,800 0 6 Depreciation 1,500 1,500 1,500 1,500 1,500 7 EBIT 3,200 3,200 3,200 3,200 1,500 8 Income Tax at 40 1,280 1,280 1,280 1,280 600 9 Incremental Earnings 1,920 1,920 1,920 1,920 900 10 Add Back Depreciation 1,500 1,500 1,500 1,500 1,500 11 Purchase of Equipment 7,500 12 Subtract Changes in NWC 1,125 0 0 0 1,125 13 Incremental Free Cash Flows 7,500 2 295 3,420 3,420 3,420 1,725 Based upon the chart above, calculate Ripples IRR ( ) to two decimal places Note required return 9

Question

LO w N oooo 1 Year 0 1 2 3 4 5 2 Revenues 13,000 13,000 13,000 13,000 0 3 Costs of Goods Sold  5,500  5,500  5,500  5,500 0 4 Gross Profit 7,500 7,500 7,500 7,500 0 5 Selling, General, and Administrative  2,800  2,800  2,800  2,800 0 6 Depreciation  1,500  1,500  1,500  1,500  1,500 7 EBIT 3,200 3,200 3,200 3,200  1,500 8 Income Tax at 40   1,280  1,280  1,280  1,280 600 9 Incremental Earnings 1,920 1,920 1,920 1,920  900 10 Add Back Depreciation 1,500 1,500 1,500 1,500 1,500 11 Purchase of Equipment  7,500 12 Subtract Changes in NWC  1,125 0 0 0 1,125 13 Incremental Free Cash Flows  7,500 2 295 3,420 3,420 3,420 1,725 Based upon the chart above, calculate Ripples IRR ( ) to two decimal places Note   required return   9

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Question

LO w N oooo 1 Year 0 1 2 3 4 5 2 Revenues 13,000 13,000 13,000 13,000 0 3 Costs of Goods Sold -5,500

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