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Week 4 Capital Budgeting Problem George and Wi...

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Week 4 Capital Budgeting Problem George and William Phelps are considering a 6 year project that would require a cash outlay of $80,000 for equipment and an additional $20,000 for working capital that would be released at the end of the project. The equipment would be depreciated evenly over the 6 years and have a salvage value of $8,000 at the end of 6 years. The project would generate before tax annual cash inflows of $28,500. The tax rate is 35% and the company?s discount rate is 14%. Required: 1. What is the annual accounting income? 2. What is the annual after tax cash flow? 3. What is the payback based upon the initial cash outflows? 4. What is the discounted payback based upon the initial cash outflows? 5. What is the simple rate of return based upon the initial cash outflows? 6. What is the net present value? 7. What is the internal rate of return? 8. Would you recommend this project or not? Why?,Thank you Very much.,Thank you,Please see attached what I have work on. But I am not certain if I am 100% correct, and/or if I am missing anything. I had to set it up a little different from the cronological way the questions were ask since there were pieces of information that I needed prior to answer some questions. Please advice,attachment,I am not sure if the attachment is going through.,attachment

 

Paper#11304 | Written in 18-Jul-2015

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