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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

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Expert Solution

ekkarill92 answered 2 years ago
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