The capital budgeting director of Global Products, Inc. is evaluating a new project that would...
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The capital budgeting director of Global Products, Inc. is evaluating a new project that would increase revenues by $66,000 per year. Associated annual related expenses for this project are estimated at $35,000. The projected cost of the project is $55,000. The project anticipates the immediate need of $7,000 in net operating working capital that should be recaptured at the end of the projects three-year life. The marginal tax rate is 21%. The firm plans to depreciate the project using MACRS. The cost of capital is 8.5%. Salvage value is estimated to be $8,500.
MACRS
Year I .3333
Year II .4445
Year III .1481
Year IV .0741
Compute the projects NPV, IRR, MIRR, Discounted Payback and Payback.
-------NOT WITH EXCEL----, FOCUS ON DISCOUNTED PAYBACK, THATS WHAT I AM CONFUSED ON.
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