FIN 325 Week 3 Problems(1)

# FIN 325 Week 3 Problems(1) - 23) marginal tax rate = 35%...

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Chapter 7 16) Required rate of return is 12% C-0 C-1 C-2 C-3 -10,000.00 0.00 7,500.00 8,500.00 NPV is 2,029.08 used calculator IRR is 20.6% ACCEPT, IRR is greater than opportunity cost of capital 25) C-0 C-1 C-2 C-3 -36.00 20.00 20.00 20.00 A -50.00 25.00 25.00 25.00 B a) PV disc. 10% PV disc. 10% PV disc. 10% NPV Profitability Index -36.00 22.00 16.53 15.03 A 17.56 -0.49 -50.00 27.50 20.66 18.78 B 16.94 -0.34 Project A b) Project A c) With unlimited funds choose Project A With limited funds choose Project A http://www.datadynamica.com/irr.asp

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Chapter 8
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Unformatted text preview: 23) marginal tax rate = 35% discount rate = 8% depreciated over 5 years to a salvage value of \$20,000 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Cost (100,000.00) Cash inflow savings \$20,000 \$20,000 \$20,000 \$20,000 \$20,000 expense (\$10,000) (\$10,000) (\$10,000) (\$10,000) (\$10,000) Machine Sale-Antic. 30,000 (100,000.00) 10,000.00 10,000.00 10,000.00 10,000.00 40,000.00 Total (20,000.00) No, they should not buy. Doesn't look like a good investment....
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## This note was uploaded on 09/06/2011 for the course FIN n/a taught by Professor N/a during the Spring '06 term at University of Phoenix.

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FIN 325 Week 3 Problems(1) - 23) marginal tax rate = 35%...

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