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DSSS Corporation DSSS Corporation is considering a new project to manufacture widgets. The cost of the manufacturing equipment is $115,000. The cost of shipping and installation is an additional $17,000. The asset will fall into the 3-year MACRS class. The year 1-4 MACRS percentages are 33.33%, 44.45%, 14.81%, and 7.41%, respectively. Sales are expected to be $220,000 per year. Cost of goods sold will be 60% of sales. The project will require an increase in net working capital of $17,000. At the end of three years, DSSS plans on ending the project and selling the manufacturing equipment for $30,000. The marginal tax rate is 40% and DSSS Corporation's appropriate discount rate is 10%. The fixed expenses is $12,000. Refer to DSSS Corporation. What is the IRR of the project? O 17% 22% 25% O-19%

DSSS Corporation DSSS Corporation is considering a new project to manufacture widgets. The cost of the manufacturing equipment is $115,000. The cost of shipping and installation is an additional $17,000. The asset will fall into the 3-year MACRS class. The year 1-4 MACRS percentages are 33.33%, 44.45%, 14.81%, and 7.41%, respectively. Sales are expected to be $220,000 per year. Cost of goods sold will be 60% of sales. The project will require an increase in net working capital of $17,000. At the end of three years, DSSS plans on ending the project and selling the manufacturing equipment for $30,000. The marginal tax rate is 40% and DSSS Corporation's appropriate discount rate is 10%. The fixed expenses is $12,000. Refer to DSSS Corporation. What is the IRR of the project? O 17% 22% 25% O-19%

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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DSSS Corporation DSSS Corporation is considering a new project to manufacture widgets. The cost of the manufacturing equipment is $115,000. The cost of shipping and installation is an additional $17,000. The asset will fall into the 3-year MACRS class. The year 1-4 MACRS percentages are 33.33%, 44.45%, 14.81%, and 7.41%, respectively. Sales are expected to be $220,000 per year. Cost of goods sold will be 60% of sales. The project will require an increase in net working capital of $17,000. At the end of three years, DSSS plans on ending the project and selling the manufacturing equipment for $30,000. The marginal tax rate is 40% and DSSS Corporation's appropriate discount rate is 10%. The fixed expenses is $12,000. Refer to DSSS Corporation. What is the IRR of the project? O 17% 22% 25% O-19%
Transcribed Image Text:DSSS Corporation DSSS Corporation is considering a new project to manufacture widgets. The cost of the manufacturing equipment is $115,000. The cost of shipping and installation is an additional $17,000. The asset will fall into the 3-year MACRS class. The year 1-4 MACRS percentages are 33.33%, 44.45%, 14.81%, and 7.41%, respectively. Sales are expected to be $220,000 per year. Cost of goods sold will be 60% of sales. The project will require an increase in net working capital of $17,000. At the end of three years, DSSS plans on ending the project and selling the manufacturing equipment for $30,000. The marginal tax rate is 40% and DSSS Corporation's appropriate discount rate is 10%. The fixed expenses is $12,000. Refer to DSSS Corporation. What is the IRR of the project? O 17% 22% 25% O-19%
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