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CoolTech Inc. is considering a new refrigerated warehouse which will cost $7,000,000 and is expected to...

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Finance

CoolTech Inc. is considering a new refrigerated warehouse whichwill cost $7,000,000 and is expected to have revenues of $900,000at the end of each of the next 5 years and expenses of $200,000 foryears 1-3 and $250,000 for years 4-5. The warehouse is depreciatedfor 40 years on a straight line basis and expects to have a salvagevalue of $1,000,000. At the end of 5 years, they expect to sell thewarehouse for $6,000,000. Working capital requirements will be$125,000 up front. CoolTech’s tax rate is 40% and their cost ofcapital is 12%.


CoolTech’s IRR is __________%. Answer in percentage, rounded to twodecimal places.

Answer & Explanation Solved by verified expert
4.4 Ratings (593 Votes)
CoolTechs IRR is 371Below is the calculation of IRRSale value of warehouse    See Answer
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