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Q2 Brayani Kids Ltd. an airline caterer, is purchasing refrigerated trucks at a total cost of $3.25 million. After-tax net income from this investment
Q2 Brayani Kids Ltd. an airline caterer, is purchasing refrigerated trucks at a total cost of $3.25 million. After-tax net income from this investment is expected to be $750 000 for the next 5 years. Annual depreciation expense was $650 000. The company's cost of capital is 17 percent. (10 Marks). a. b. C. d. What is the discounted payback period? (1 Mark for correct formula, 1 Mark for correct calculation and 0.5 Mark for correct answer to equal a total of 2.5 Marks). Calculate the ARR 2 (1 Mark for correct formula, 1 Mark for correct calculation and 0.5 Mark for correct answer to equal a total of 2.5 Marks). What is the NPV on this investment? (1 Mark for correct formula, 1 Mark for correct calculation and 0.5 Mark for correct answer to equal a total of 2.5 Marks). Calculate the IRR 2 (1 Mark for correct formula, 1 Mark for correct calculation and 0.5 Mark for correct answer to equal a total of 2.5 Marks).
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