Use the following information to answer the question below.
You have been asked to render an opinion to your boss as to whether your employer should enter into the short-term capital project described below.
The project requires the purchase of a new piece of equipment for a price of $25,000. The firm has paid a consultant $1,000 to estimate the revenues expected from the project. The firm that ships the equipment and installs it in our plant will charge $500.
The project's incremental operating cashflows before taxes will be $15,000 per year for three years. At the end of three years the equipment will be sold for $7344. The equipment will go into an asset class with a CCA rate of 40%. The tax rate is 34% and the firm's required rate of return is 17%. (Note:this is not the only asset in the pool.)
-Based on your net cash flows that you have calculated in the question above, what is the:
a. payback period
b. net present value
c. internal rate of return

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The Answer of Use the following information to answer the question below.
You have been asked to render an opinion to your boss as to whether your employer should enter into the short-term capital project described below.
The project requires the purchase of a new piece of equipment for a price of $25,000. The firm has paid a consultant $1,000 to estimate the revenues expected from the project. The firm that ships the equipment and installs it in our plant will charge $500.
The project's incremental operating cashflows before taxes will be $15,000 per year for three years. At the end of three years the equipment will be sold for $7344. The equipment will go into an asset class with a CCA rate of 40%. The tax rate is 34% and the firm's required rate of return is 17%. (Note:this is not the only asset in the pool.)
-Based on your net cash flows that you have calculated in the question above, what is the:
a. payback period
b. net present value
c. internal rate of return

Use the Following Information to Answer the Question Below