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Problem 6-15 Project NPV and IRR A project requires an initial investment of $100,000 and is...

Question:

Problem 6-15 Project NPV and IRR A project requires an initial investment of $100,000 and is expected to produce a cash inflo
Problem 6-15 Project NPV and IRR A project requires an initial investment of $100,000 and is expected to produce a cash inflow before tax of $26,700 per year for five years. Company A has substantial accumulated tax losses and is unlikely to pay taxes in the foreseeable future. Company B pays corporate taxes at a rate of 21% and can claim 100% bonus depreciation on the investment. Suppose the opportunity cost of capital is 9%. Ignore inflation. a. Calculate project NPV for each company. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) * Answer is complete but not entirely correct. NPV Company $ 3.854 Company $ 1,310 b. What is the IRR of the after-tax cash flows for each company? (Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal places.) Company Company Answer is complete but not entirely correct. IRR 10.5 % 10.0 %

Answers

B11 - : X fix =IRR(B4:39) A B C D E F Cash flows Present value 2 Year Company A Company B PVIF @ 9% Company A Company B 3 A в

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