问题如下:
1. What terminal selling price is required for a 15 percent internal rate of return on the Richie project?
选项:
A.$588,028
B.$593,771.
C.$625,839.
解释:
C is correct.
The after-tax operating cash flow for each of the next three years is $20,000 + $40,000 = $60,000. The book value in three years will be $380,000 (the original cost less three years’ depreciation). So the terminal year after-tax non-operating cash flow will be [#PZMATH419#] – 0.30( [#PZMATH419#] –$380,000), where [#PZMATH419#] is the selling price. For a 15 percent return, the PV of future cash flows must equal the investment:
[#PZMATH422#]
There are several paths to follow to solve for [#PZMATH419#].
[#PZMATH424#]
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