Hydroponics is considering adding another greenhouse that would cost $95,000 and generate $20,000 in annual net cash flows over its 8 year expected life.The greenhouse would be depreciated on a straight-line basis to zero and the salvage value is also expected to be zero.If the firm has a marginal tax rate of 40 percent, what is this project's internal rate of return?
A)between 20 and 24%
B)between 13 and 14%
C)between 28 and 32%
D)between 7 and 8%

Question

Quizplus · Accepted Answer

PVIFAᵣ,₈ = $95,000/$20,000 = 4.75, which is between 13 and 14 percent in Table IV

Hydroponics Is Considering Adding Another Greenhouse That Would Cost $95,000