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Global Water Treatment, Inc. is analyzing a proposed investment that would initially require $750,000 of new...

Global Water Treatment, Inc. is analyzing a proposed investment that would initially require $750,000 of new equipment. This equipment would be depreciated on a straight-line basis to a zero balance over the four-year life of the project. The estimated salvage value is $150,000. The project requires $50,000 initially for net working capital, all of which will be recouped at the end of the project. The projected operating cash flow is $ 265,000 a year. What is the internal rate of return on this project if the relevant tax rate is 21 percent?

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M R S Year 4 Year 1 Year 2 Year 3 4 5 6 7 265000 -187500 9 Year 0 Initial Cost -750000 Working Capital -50000 Anuual Inflowsο Ι Ρ Ι Ο RS Year 4 3 4 5 6 Year 1 - Year 2 - Year 3 - 8 Year 0 Initial Cost -750000 Working Capital -50000 Anuual Inflows Le

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