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The Fit for Life Gym is looking at investing in a new project. The machinery required for a three-year project costs $20,000, belongs in a
The Fit for Life Gym is looking at investing in a new project. The machinery required for a three-year project costs $20,000, belongs in a 15% CCA class, and will require a net working capital investment of $5,000 up-front. This working capital will be recovered in year 3. The project generates after-tax operating income of $11,500 annually. The machinery will be sold for $2,000 at the end of the project. The firm has a tax rate of 34% and a required return of 10%. What is the IRR? Should the company go ahead with the project. (1 mark) E. What is the Profitability Index (PI)? Should the company go ahead with the project
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