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    Meredith Inc.

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    Meredith Inc. is considering a project that would require an initial investment of $210,000 and would have a useful life of 6 years. The annual cash receipts would be $126,000 and the annual cash expenses would be $57,000. The residual value of the assets used in the project would be $32,000 at the end of the 6th year. The company's tax rate is 30%. For tax purposes, the entire initial investment will be depreciated by the straight-line method to zero salvage value over 5 years. The company uses a discount rate of 10%.

    Question: What is the net present value and IRR of the asset?

    PLEASE SHOW WORK AND EXPLAIN.

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    Net Present Value & Internal Rate of Return (IRR)

    Meredith Inc. is considering a project that would require an initial investment of $210,000 and would have a useful life of 6 years. The annual cash receipts would be $126,000 and the annual cash expenses would be $57,000. The residual value of the assets used in the project would be $32,000 at the end of the 6th year. The company's tax rate is 30%. For tax purposes, the entire initial investment will be depreciated by the straight-line method to zero salvage value over 5 years. The company uses a discount rate of 10%.

    Question: What is the net present value and IRR of the asset?

    Year 0 1 2 3 4 5 6
    I. Investment Outlay
    1. Capital Investments -210,000
    2. Total net ...

    Solution Summary

    This solution is comprised of a detailed explanation to answer what is the net present value and IRR of the asset.

    $2.19

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