Kendall Corporation is considering a project that would require an initial investment of $1,275,000 and would have a useful life of 10 years. The annual net cash receipts would be $355,000. The salvage value of the assets used in the project would be $105,000. The company’s tax rate is 30%. For tax purposes, the entire initial investment without any reduction for salvage value will be depreciated over 10 years. The company uses a discount rate of 17%.
Required information
Required:
Compute the net present value of the project by inputting the variables that are entered into your calculator / Excel. (If a variable is not used in the calculation, input a zero (0). Omit the "$" and "%" signs in your response.) Round answers to the nearest dollar and use a minus sign ( - ) for negative numbers.
Excel / calculator input:
Interest Rate
(Rate, I, I/YR) %
Nper, N
PMT $
PV $
FV $
Net present value $
Required:
Compute the internal rate of return of the project by inputting the variables that are entered into your calculator / Excel. (If a variable is not used in the calculation, input a zero (0). Omit the "$" and "%" signs in your response.) Round answers to the nearest dollar / whole number and use a minus sign (-) for negative numbers.
Excel / calculator input:
Interest Rate
(Rate, I, I/YR) %
Nper, N
PMT $
PV $
FV $
Internal Rate of Return (IRR) %