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Tamalito International Corporation is considering an investment of $400,000 in equipment for producing a new tamal-software package. The equipment has an expected life of 4
Tamalito International Corporation is considering an investment of $400,000 in equipment for producing a new tamal-software package. The equipment has an expected life of 4 years. Sales are expected to be 60,000 units per year at a price of $20 per unit. Fixed costs excluding depreciation of the equipment are $200,000 per year, and variable costs are $12 per unit. The equipment will be depreciated over 4 years using the straight line method with a zero salvage value. Working capital requirements are assumed to be 1/12 of annual sales. The market capitalization rate for the project is 15% per year, and the corporation pays income tax at the rate of 34%. What is the project's IRR ? 16.82% 16.95% 28.86% 25.90% 31.01% Not Available
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