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You are considering investing in a cost cutting proposal. Net income from the project is expected to equal $27.50 each of the three years of
You are considering investing in a cost cutting proposal. Net income from the project is expected to equal $27.50 each of the three years of the project's life. The process has an initial cost of $125 and will be depreciated straight-line over 3 years to a salvage value of $0. Assume a 34 percent tax bracket and a discount rate of 15 percent Suppose the equipment is sold at the end of year 3 for $20 pretax What is the internal rate of return? IRE $125 Initial A. 16.3 percent B. 29.5 percent C. 33.6 percent D. 45.8 percent E. 62.7 percent cost
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