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Question
After a long drought, the manager of Long Branch Farm is considering the installation of an irrigation system which will cost $100,000. It is estimated that the irrigation system will increase revenues by $20,500 annually, although operating expenses other than depreciation will also increase by $5,000. The system will be depreciated using MACRS over its depreciable life (5 years) to a zero salvage value. If the tax rate on ordinary income is 40 percent, what is the project's IRR?
a. 12.6%
b. u22121.3%
c. 13.0%
d. 10.2%
e. u22124.8%
Answer
This answer is hidden. It contains 980 characters.
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