Question
Needed help with steps on Texas BA ii PLUS calculator Your company is considering the purchase of an evolutionary piece of equipment. This equipment would
Needed help with steps on Texas BA ii PLUS calculator
Your company is considering the purchase of an evolutionary piece of equipment. This equipment would increase sales by $90,000 each year for nine years. The use of this equipment would increase annual costs by $25,000 and the equipment would be depreciated straight line over the useful life of nine years.
[a] Assuming a tax rate of 21%, calculate net income.
[b] Calculate the Operating Cash Flow for the project.
[c] Assuming the project has an initial cost of $300,000 and lasts nine years, calculate the NPV of the project assuming a required rate of return of 10%.
[d] Calculate the Internal Rate of Return on the project.
[e] Should you accept or reject this project?
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