Bauerkemper Inc. is considering a project that would require an initial investme
ID: 2701873 • Letter: B
Question
Bauerkemper Inc. is considering a project that would require an initial investment of $924,000 and would have a useful life of 7 years. The annual net cash receipts would be $346,000. The salvage value of the assets used in the project would be $92,000. The company%u2019s tax rate is 30%. For tax purposes, the entire initial investment without any reduction for salvage value will be depreciated over 7 years. The company uses a discount rate of 17%.
Compute the internal rate of return of the project by inputting the variables that are entered into your calculator / Excel. (If a variable is not used in the calculation, input a zero (0). Omit the "$" and "%" signs in your response.) Round answers to the nearest dollar / whole number and use a minus sign (-) for negative numbers.
Excel / calculator input:
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.
Explanation / Answer
Interest Rate
(Rate, I, I/YR)
6 %
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Nper, N
PMT $ 15,000
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PV $ 12,000
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FV $ 18,000
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Net present value $ 43,000
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