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The Lunch Counter is expanding and expects operating cash flows of $26,400 a year for four years as a result. This expan
Posted: Thu May 05, 2022 8:19 am
by answerhappygod
- The Lunch Counter Is Expanding And Expects Operating Cash Flows Of 26 400 A Year For Four Years As A Result This Expan 1 (21.54 KiB) Viewed 41 times
The Lunch Counter is expanding and expects operating cash flows of $26,400 a year for four years as a result. This expansion requires $48,000 in new fixed assets (This amount has to be depreciated for requirement i). These assets will be worthless at the end of the project. In addition, the project requires $25,000 of net working capital throughout the life of the project. What is the net present value of this expansion project at a required rate of return of 15.6 percent? i) The equipment falls in the five-year MACRS class with annual percentages of .2. .32..192..1152, 1152, and .0576 for Years 1 to 6, respectively. What is the depreciation on 3rd year? (3 pnts) ii) What is the NPV of the project? Do you recommend accepting the project based on NPV? (6 pnts) iii) What is the IRR of the project? Do you recommend accepting the project based on ORR? (6 pnts)