Plz help! Your firm has the following tax information: the firm has a 15% ordina

Question

Plz help!

Your firm has the following tax information: the firm has a 15% ordinary tax rate and a 20% capital gains tax rate. The firm has an 8.5% cost of capital. The firm is considering two projects: The cost of project A is $500,000. Installation costs net of taxes are $100,000. An existing asset which originally cost $90,000 and has a $50,000 book value can be sold for $60,000. The project will have the following cash flows: Year 1: -$70,000 Year 2: $150,000 Year 3: $250,000 Year 4: $350,000 The cost of project B is $1,500,000. Installation costs net of taxes are $300,000. An existing asset which originally cost $800,000 and a $150,000 book value can be sold for $60,000. The project will have the following cash flows: Year 1: $700,000 Year 2: $250,000 Year 3: $1,350,000 Year 4: $1,650,000 Year 5:$60,000 Year 6:$78,000 Calculate Net present value. Internal rate of return, and modified internal rate of return. Discuss factors pertinent to whether the firm should adopt either project. You have 35 years until retirement. You figure you can investment $800 per month until then. After retirement you will draw out of retirement at the rate of $3,000 per month. You figure you will live another 20 years after retirement. Your discount rate after retirement is 5%. What annual interest rate would you have to earn before retirement to meet your needs? Show all work. Show your steps using your financial calculator grid or app.

Explanation / Answer

PROJECT

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.