A customer purchased a total of 10 hats and scarves. Each hat cost $4.50 and each scarf cost $3.00. The customer spent $36.00 al
2 answers:
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Answer:
IRR = 31.93%
Step-by-step explanation:
Depreciation = 570,000/5 = 114,000
<u>Calculation of Operating cash flow</u>
Operating income = 270000 - 114000 = 156,000
Tax = 156,000 * 35% = 54,600
Operating cash flow = Operating income + Depreciation - Tax = 156,000 + 114,000 - 54,600 = 215,400
<u>Calculation of initial investment</u>
CF0 = Initial investment - Working capital = 570,000 - 73,000 = 497,000
<u>Calculation of the last year cash flow</u>
CF5 = OCF + After tax salvage - Net working capital = 215,400 + 37,000 - 73,000 = 180,100
<u>Calculation of IRR</u>
IRR for the project = IRR(Cashflow from year0, 1, 2,3,4,5) <em>"as attached below picture below"</em>
IRR for the project = 31.93%
