The Boston Culinary Institute is evaluating a classroom remodeling project. The cost of the remodel will be $350,000 and will be depreciated over six years using the straight-line method. The remodeled room will accommodate five extra students per year. Additional information relating to the project follows: $ 350,000 6 Cost of the remodel project Useful life of project in years Annual number of extra accommodated students Annual tuition per student Before-tax incremental cost of a student Company's income tax rate Required rate of return 5 $ 22,000 $ 2,000 20% 12% Required Assuming a six-year time horizon, what is the internal rate of return of the remodeling project? Calculate using both present value factors and separately using Excel's IRR function. Annual cash flow: Revenue Less costs: Other than depreciation Depreciation Income before taxes Income tax expense Net income Add depreciation Cash flow Present value factor: + factor Indicate how the Internal rate of return is calculated using the factor arrived at above. IRR function Cash Flows Investment 1 2 5 6 IRR Use the excel function in cell 043 Should the company invest in the remodel? Explain