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Tichtop Ltd is considering investing $80 million in equipment which
will generate a net cash flow of $32 million per year for four years.
The company is able to depreciate the equipment at rate of 20% per
year on a straight line basis for tax purposes. The market value of
the equipment at the end of four years is expected to be $30 million.
The difference between the market value and the equipment’s tax value
is subject to tax. The corporate tax rate is 28% and the company’s
cost of capital is 14%.Calculate:
(a) the project’s NPV
(b) the project’s IRR
(c )the project’s MIRR
( d ) the project’ pay back
my assignment is due i have no clue on how to write it please helpI am sorry, but we do not provide answers to assignments.
Everything necessary to answer all except for part (c) is explained in detail in our free lectures.
MIRR is not examinable in FM – only in paper AFM, and you can find lectures on it in the AFM section of this website.
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