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In: Accounting

Huron Shores Bakery is expecting to generate the following from a $692,000 investment: Year Earnings before...

Huron Shores Bakery is expecting to generate the following from a $692,000 investment:


Year

Earnings before
Amortization and Taxes

Cash flows (after taxes and preferred share dividends)

1

$208,000

$180,200

2

171,000

154,300

3

175,000

157,100

4

292,000

239,000

5

244,000

205,400

6

192,000

169,000

Additional Information:

  • the asset will be fully depreciating over the six-year time period, using straight-line depreciation, and
  • Huron Shores Bakery has a 30.00 percent tax rate.

Requirements:

Compute:

1. Average Account Return

1. the payback period

2. IRR for the project

3. NPV if WACC is 10.00 percent

Should the project be undertaken?  (Click to select)  Yes  No

Solutions

Expert Solution

ekkarill92 answered 3 years ago
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