A Project Requires an Initial Investment of $200,000 and Expects

question 32

Multiple Choice

A project requires an initial investment of $200,000 and expects to produce a cash flow before taxes of $120,000 per year for two years .The corporate tax rate is 30 percent.The assets will depreciate using the MACRS year 3 schedule: (t = 1: 33%) ; (t = 2: 45%) ; (t = 3: 15%) ; (t = 4: 7%) .The company's tax situation is such that it can use all applicable tax shields.The opportunity cost of capital is 11 percent.Assume that the asset can sell for book value at the end of the project.Calculate the approximate IRR for the project.

• A)12.00 percent
• B)11.00 percent
• C)17.73 percent
• D)14.06 percent

---

Definitions:

Similar Cells

Cells that share common characteristics or functions, often grouped together to form tissues in multicellular organisms.

Adipose Tissue

Tissue in which fat is stored.

Chemical Signals

Molecules released by cells to communicate with other cells, often regulating biological processes by binding to receptors on target cells.

Electrical Signals

The transmission of information through a biological organism or artificial device using changes in electrical potential.