Blossom Corporation is considering investing in a new facility. The estimated cost of the facility is $1,791,500. It will be used for 12years, then sold for $715,000. The facility will generate annual cash inflows of $350,000 and will need new annual cash outflows of$150,000. The company has a required rate of return of 7%. Click here to view PV table.Calculate the internal rate of return on this project. (Round answer to 0 decimal place, e.g. 13%.)Internal rate of return isWhether the project should be accepted.The project✰ be accepted.%

Solution:-Net Annual cash inflows: $350,000-$150,000 =$ 200,000Sale value of facility after 12 years…

Answered: Blossom Corporation is considering…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 19EA: Redbird Company is considering a project with an initial investment of $265,000 in new equipment...

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Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 8%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?
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