(Answered) Question - possibilities inc is considering the following

Accounting

Question - Possibilities, Inc. is considering the following investment. For financial reporting purposed the entire initial investment will be depreciation over 5 years by the straight-line method. For tax purposes, the entire initial investment will be depreciated by MACRS over 5 years. The investment will last 7 years.

Investment	9,250,000	5-yr MACRS
Working Capital	175,000	1	20.00%
Revenue	3,500,000	2	32.00%
Expenses	1,450,000	3	19.20%
Salvage value	500,000	4	11.52%
Residual value	750,000	5	11.52%
Tax rate	30%	6	5.76%
Cost of Capital	10.0%

Required - What is the net present value and IRR of the investment?

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