A project requires an initial investment of $100,000 and is expected to produce a cash inflow...

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Finance

A project requires an initial investment of $100,000 and isexpected to produce a cash inflow before tax of $27,700 per yearfor five years. Company A has substantial accumulated tax lossesand is unlikely to pay taxes in the foreseeable future. Company Bpays corporate taxes at a rate of 21% and can claim 100% bonusdepreciation on the investment. Suppose the opportunity cost ofcapital is 11%. Ignore inflation.
a. Calculate project NPV for each company. (Do not roundintermediate calculations. Round your answers to the nearest wholedollar amount.)
b. What is the IRR of the after-tax cash flows for each company?(Do not round intermediate calculations. Enter your answers as apercent rounded to 1 decimal places.)

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A project requires an initial investment of $100,000 and isexpected to produce a cash inflow before tax of $27,700 per yearfor five years. Company A has substantial accumulated tax lossesand is unlikely to pay taxes in the foreseeable future. Company Bpays corporate taxes at a rate of 21% and can claim 100% bonusdepreciation on the investment. Suppose the opportunity cost ofcapital is 11%. Ignore inflation.a. Calculate project NPV for each company. (Do not roundintermediate calculations. Round your answers to the nearest wholedollar amount.)b. What is the IRR of the after-tax cash flows for each company?(Do not round intermediate calculations. Enter your answers as apercent rounded to 1 decimal places.)