Question

In: Finance

Creative Software Corporation is considering a new project whose data are shown below. The required equipment...

Creative Software Corporation is considering a new project whose data are shown below. The required equipment has a 3-year tax life, after which it will be worthless, and it will be depreciated by MACRS over 3 years. Revenues and other operating costs are expected to be constant over the project’s 3-year life. What is the project’s IRR and NPV? Briefly discuss your results. Equipment cost $65,000 Sales Revenue each year $60,000 Operating Costs $25,000 Salvage Value $15,000 Tax Rate 35%

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

DISCOUNT RATE MISSING, SO CALCULATED IRR ONLY. PROVIDE DISCOUNT RATE, WILL CALCULATE NPV ALSO. THANK YOU

jeff jeffy answered 6 months ago
Next > < Previous

Related Solutions

Creative Software Corporation is considering a new project whose data are shown below. The required equipment...
Creative Software Corporation is considering a new project whose data are shown below. The required equipment has a 3-year tax life, after which it will be worthless, and it will be depreciated by MACRS over 3 years. Revenues and other operating costs are expected to be constant over the project’s 3-year life. What is the project’s NPV? Briefly discuss your results. Equipment cost $65,000 Sales Revenue each year $60,000 Operating Costs                $25,000 Salvage Value                  $15,000 Tax Rate                           35%
Creative Software Corporation is considering a new project whose data are shown below. The required equipment...
Creative Software Corporation is considering a new project whose data are shown below. The required equipment has a 3-year tax life, after which it will be worthless, and it will be depreciated by MACRS over 3 years. Revenues and other operating costs are expected to be constant over the project’s 3-year life. The WACC is 8%. What is the project’s NPV? Briefly discuss your results. Equipment cost $65,000 Sales Revenue each year $60,000 Operating Costs                $25,000 Salvage Value                  $15,000 Tax...
Clemson Software is considering a new project whose data are shown below. The required equipment has...
Clemson Software is considering a new project whose data are shown below. The required equipment has a 3-year tax life, after which it will be worthless, and it will be depreciated by the straight-line method over 3 years. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's Year 1 cash flow? Do not round the intermediate calculations and round the final answer to the nearest whole number. Equipment cost (depreciable...
Clemson Software is considering a new project whose data are shown below. The required equipment has...
Clemson Software is considering a new project whose data are shown below. The required equipment has a 3-year tax life and will be depreciated by the straight-line method over 3 years. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's Year 1 cash flow? Equipment cost (depreciable basis) $65,000 Increase in inventory $5,000 Straight-line depreciation rate 33.333% ($21,667 per year) Sales revenues, each year $60,000 Operating costs (excl. depreciation) $25,000...
ool Proof Software is considering a new project whose data are shown below. The equipment that...
ool Proof Software is considering a new project whose data are shown below. The equipment that will be used has a 3-year class life and will be depreciated by the MACRS depreciation system. Revenues and Cash operating costs are expected to be constant over the project's 10-year life. What is the Year 1 after-tax net operating cash flow? Enter your answer rounded to two decimal places. Do not enter $ or comma in the answer box. For example, if your...
Cookie Cutter Corp. is considering a new project whose data are shown below. The equipment that...
Cookie Cutter Corp. is considering a new project whose data are shown below. The equipment that would be used has a 5-year tax life, would be depreciated by the straight-line method over its 5-year life, and would have a zero salvage value. No change in net operating working capital would be required. Revenues and other operating costs are expected to be constant over the project's 5-year life. What is the project's NPV? Do not round the intermediate calculations and round...
Cookie Cutter Corp. is considering a new project whose data are shown below. The equipment that...
Cookie Cutter Corp. is considering a new project whose data are shown below. The equipment that would be used has a 5-year tax life, would be depreciated by the straight-line method over its 5-year life, and would have a zero salvage value. No change in net operating working capital would be required. Revenues and other operating costs are expected to be constant over the project's 5-year life. What is the project's NPV? Do not round the intermediate calculations and round...
Cookie Cutter Corp. is considering a new project whose data are shown below. The equipment that...
Cookie Cutter Corp. is considering a new project whose data are shown below. The equipment that would be used has a 5-year tax life, would be depreciated by the straight-line method over its 5-year life, and would have a zero salvage value. No change in net operating working capital would be required. Revenues and other operating costs are expected to be constant over the project's 5-year life. What is the project's NPV? Do not round the intermediate calculations and round...
Cookie Cutter Corp. is considering a new project whose data are shown below. The equipment that...
Cookie Cutter Corp. is considering a new project whose data are shown below. The equipment that would be used has a 5-year tax life, would be depreciated by the straight-line method over its 5-year life, and would have a zero salvage value. No change in net operating working capital would be required. Revenues and other operating costs are expected to be constant over the project's 5-year life. What is the project's NPV? Do not round the intermediate calculations and round...
Cookie Cutter Corp. is considering a new project whose data are shown below. The equipment that...
Cookie Cutter Corp. is considering a new project whose data are shown below. The equipment that would be used has a 5-year tax life, would be depreciated by the straight-line method over its 5-year life, and would have a zero salvage value. No change in net operating working capital would be required. Revenues and other operating costs are expected to be constant over the project's 5-year life. What is the project's IRR? Do not round the intermediate calculations. State in...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT