Your firm buys a new equipment for Rs. 80,000. It will give your firm annual savings of Rs. 27,000, for six years, with zero salvage value. It is to be depreciated by the SL method over four years, with placement at the start of the first year. Tax rate will be 12%. However, you decide to sell it early at the end of the third year, for Rs. 23,000. Calculate the after-tax IRR for this?

Your firm buys a new equipment for Rs. 80,000. It will give your firm annual savings of Rs. 27,000, for six years, with zero salvage value. It is to be depreciated by the SL method over four years, with placement at the start of the first year. Tax rate will be 12%. However, you decide to sell it early at the end of the third year, for Rs. 23,000. Calculate the after-tax IRR for this?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 2P

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