Problem 10.39 Tyler, Inc., is considering switching to a new production technology. The cost of the required equipment will be $3,764,394. The discount rate is 13.01 percent. The cash flows that the firm expects the new technology to generate are as follows. Years CF $(3,764,394) 1-2 3-5 $878,248 6-9 $1,534,992 a. Compute the payback and discounted payback periods for the project. (Round answers to 2 decimal places, e.g. 15.25.) The payback for the project is years, and the discounted payback period is J years. b. What is the NPV for the project? Should the firm go ahead with the project? (Round answer to 2 decimal places, e.g. 15.25.) The NPV of the project is $ and using the NPV rule the project should be rejected c. What is the IRR, and what would be the decision based on the IRR? (Round answer to 2 decima accepted . 15.25.)

Problem 10.39 Tyler, Inc., is considering switching to a new production technology. The cost of the required equipment will be $3,764,394. The discount rate is 13.01 percent. The cash flows that the firm expects the new technology to generate are as follows. Years CF $(3,764,394) 1-2 3-5 $878,248 6-9 $1,534,992 a. Compute the payback and discounted payback periods for the project. (Round answers to 2 decimal places, e.g. 15.25.) The payback for the project is years, and the discounted payback period is J years. b. What is the NPV for the project? Should the firm go ahead with the project? (Round answer to 2 decimal places, e.g. 15.25.) The NPV of the project is $ and using the NPV rule the project should be rejected c. What is the IRR, and what would be the decision based on the IRR? (Round answer to 2 decima accepted . 15.25.)

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section10.5: Modified Internal Rate Of Return (mirr)

Problem 3ST

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