XZY, Incorporated, is considering the purchase of new equipment that will allow the company to collect loose hen feathers for sale. The equipment will cost $525,000 and will be eligible for 100% bonus depreciation. The equipment can be sold for $35,000 at the end of the project in five years. Sales would be $348,000 per year, with annual fixed costs of $56,000 and variable costs equal to 35% of sales. The project would require an investment of $31,000 in NWC that would be returned at the end of the project. The tax rate is 22% and the required rate of return is 9%. a. Calculate the NPV of this project.
b. Calculate the IRR of this project.
c. Assume reinvestment rate equals required rate of return. Calculate the MIRR of this project using combination approach.
d. Calculate the payback period of this project.