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Max Gluteus, is the sole proprietor of an industrial painting firm that serves petrochemi

Max Gluteus, is the sole proprietor of an industrial painting firm that serves petrochemi

 Max Gluteus, is the sole proprietor of an industrial painting firm that serves petrochemical plants in the Texas Gulf Coast. He has always evaluated projects according to a maximum three-year payback. Recently he read about NPv and IRR, but did not understand any of it. He asks for your help in evaluating the purchase of a new industrial sprayer. To finance the project he will borrow funds at a before-tax annual rate of7.5%. Based on his experience and on the technical information provided by the manufacturer of the machine, he has calculated the following free cash inflows from the project over the six-year expected live ofthe machine, Industrial Sprayer Project Initial Outlay $150,000+/- $20,000 30,000 CF3 40,000 CF4. 60,000 CF5 60,000 CF6 50,000 1. What is the payback period of the project? a. three-years b. four years c. five-years d, six-years 2. What is the NPV of the project if Max is in the 30% marginal tax bracket? a. S91,740.1 b, 62,524.88 c. 103,423.17 d. 83,485.36 e. 94,540.45 3. What is the IRR of the project? a. 3.75%

Abhinav 04-Dec-2019

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