Question

In: Finance

"A firm is considering purchasing a computer system. The following data has been collected. - Cost...

"A firm is considering purchasing a computer system. The following data has been collected.
- Cost of the system: $155,000
- Project life: 6 years
- Salvage value at the end of year 6: $22,000
- Depreciation method: five-year MACRS
- Tax rate: 40%
- Annual revenue from project: $130,000
- Annual expenses (not including depreciation): $93,000
The firm will borrow the entire $155,000 at 9% interest to be repaid in 2 annual payments.
The firm's MARR is 19%. Determine the IRR for the computer system. Enter your answer as a percentage between 0 and 100."

Solutions

Expert Solution

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

A firm is considering purchasing a computer system. The following data has been collected. - Cost...
A firm is considering purchasing a computer system. The following data has been collected. - Cost of the system: $172,000 - Project life: 6 years - Salvage value at the end of year 6: $16,000 - Depreciation method: five-year MACRS - Tax rate: 39% - Annual revenue from project: $142,000 - Annual expenses (not including depreciation): $92,000 The firm will borrow the entire $172,000 at 5.8% interest to be repaid in 2 annual payments. The firm's MARR is 12%. Determine...
"A firm is considering purchasing a computer system. The following data has been collected. - Cost...
"A firm is considering purchasing a computer system. The following data has been collected. - Cost of the system: $165,000 - Project life: 6 years - Salvage value at the end of year 6: $19,000 - Depreciation method: five-year MACRS - Tax rate: 32% - Annual revenue from project: $120,000 - Annual expenses (not including depreciation): $78,000 The firm will borrow the entire $165,000 at 5.5% interest to be repaid in 2 annual payments. The firm's MARR is 19%. Determine...
"A firm is considering purchasing a computer system. The following data has been collected. - Cost...
"A firm is considering purchasing a computer system. The following data has been collected. - Cost of the system: $179,000 - Project life: 6 years - Salvage value at the end of year 6: $11,000 - Depreciation method: five-year MACRS - Tax rate: 41% - Annual revenue from project: $136,000 - Annual expenses (not including depreciation): $85,000 The firm will borrow the entire $179,000 at 7.5% interest to be repaid in 2 annual payments. The firm's MARR is 13%. Determine...
"A firm is considering purchasing a computer system. The following data has been collected. - Cost...
"A firm is considering purchasing a computer system. The following data has been collected. - Cost of the system: $125,000 - Project life: 6 years - Salvage value at the end of year 6: $18,000 - Depreciation method: five-year MACRS - Tax rate: 33% - Annual revenue from project: $109,000 - Annual expenses (not including depreciation): $88,000 The firm will borrow the entire $125,000 at 5.3% interest to be repaid in 2 annual payments. The firm's MARR is 15%. Determine...
"A firm is considering purchasing a computer system. The following data has been collected. - Cost...
"A firm is considering purchasing a computer system. The following data has been collected. - Cost of the system: $159,000 - Project life: 6 years - Salvage value at the end of year 6: $18,000 - Depreciation method: five-year MACRS - Tax rate: 32% - Annual revenue from project: $105,000 - Annual expenses (not including depreciation): $66,000 The firm will borrow the entire $159,000 at 7.4% interest to be repaid in 2 annual payments. The firm's MARR is 12%. Determine...
"A firm is considering purchasing a computer system. The following data has been collected. - Cost...
"A firm is considering purchasing a computer system. The following data has been collected. - Cost of the system: $180,000 - Project life: 6 years - Salvage value at the end of year 6: $14,000 - Depreciation method: five-year MACRS - Tax rate: 21% - Annual revenue from project: $148,000 - Annual expenses (not including depreciation): $93,000 The firm will borrow the entire $180,000 at 6.4% interest to be repaid in 2 annual payments. The firm's MARR is 15%. Determine...
"A firm is considering purchasing a computer system. -Cost of system is $191,000. The firm will...
"A firm is considering purchasing a computer system. -Cost of system is $191,000. The firm will pay for the computer system in year 0. -Project life: 5 years -Salvage value in year 0 (constant) dollars: $13,000 -Depreciation method: five-years MACRS -Marginal income-tax rate = 37% (remains constant over time) -Annual revenue = $146,000 (year-0 constant dollars) -Annual expenses (not including depreciation) = $77,000 (year-0 constant dollars) If the general inflation rate is 3.7% during the project period (which will affect...
"A firm is considering purchasing a computer system. -Cost of system is $128,000. The firm will...
"A firm is considering purchasing a computer system. -Cost of system is $128,000. The firm will pay for the computer system in year 0. -Project life: 5 years -Salvage value in year 0 (constant) dollars: $12,000 -Depreciation method: five-years MACRS -Marginal income-tax rate = 37% (remains constant over time) -Annual revenue = $128,000 (year-0 constant dollars) -Annual expenses (not including depreciation) = $94,000 (year-0 constant dollars) If the general inflation rate is 2.6% during the project period (which will affect...
"A firm is considering purchasing a computer system. -Cost of system is $188,000. The firm will...
"A firm is considering purchasing a computer system. -Cost of system is $188,000. The firm will pay for the computer system in year 0. -Project life: 4 years -Salvage value in year 0 (constant) dollars: $24,000 -Depreciation method: five-years MACRS -Marginal income-tax rate = 40% (remains constant over time) -Annual revenue = $141,000 (year-0 constant dollars) -Annual expenses (not including depreciation) = $75,000 (year-0 constant dollars) If the general inflation rate is 2.1% during the project period (which will affect...
"A firm is considering purchasing a computer system. -Cost of system is $199,000. The firm will...
"A firm is considering purchasing a computer system. -Cost of system is $199,000. The firm will pay for the computer system in year 0. -Project life: 5 years -Salvage value in year 0 (constant) dollars: $17,000 -Depreciation method: five-years MACRS -Marginal income-tax rate = 40% (remains constant over time) -Annual revenue = $144,000 (year-0 constant dollars) -Annual expenses (not including depreciation) = $91,000 (year-0 constant dollars) If the general inflation rate is 4.1% during the project period (which will affect...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT