Calculate internal rate of return of investment opportunity

Assignment Help Finance Basics

Reference no: EM133664252

Problem

Thornton Manufacturing Company has an opportunity to purchase some technologically advanced equipment that will reduce the company's cash outflow for operating expenses by $1,278,000 per year. The cost of the equipment is $7,661,925.67. Thornton expects it to have a 9-year useful life and a zero salvage value. The company has established an investment opportunity hurdle rate of 15 percent and uses the straight-line method for depreciation. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)

Task

1. Calculate the internal rate of return of the investment opportunity.

2. Indicate whether the investment opportunity should be accepted.

Reference no: EM133664252

Questions Cloud

Which category of medication can be used to treat : This decrease can cause hot flashes, fatigue, vaginal dryness and painful intercourse. Which category of medication can be used to treat these symptoms

What is the most likely organism involved : What is the most likely organism involved and What is the cause of the outbreak if all these organisms are dead

What is the total npv with the assumptions : Using the present value tax shield approach, what is the total NPV with these assumptions? Should the company proceed under these revised assumptions?

How to connect with populations of interest : Including the rationale for qualitative study explanation of approaches for study design, including how to connect with population(s) of interest.

Calculate internal rate of return of investment opportunity : Calculate the internal rate of return of the investment opportunity. Indicate whether the investment opportunity should be accepted.

What would cause the change in allele frequency : beetles and 20% blue beetles, and after 3 generations have 60% green beetles and 40% blue beetles. What would cause the change in allele frequency

What correlation between the two assets produces deviation : A portfolio consists of assets A and B. What correlation between the two assets produces the maximum portfolio standard deviation?

Examine the ethical dilemma : Choose the alternative you would recommend and defend it during discussion using ethical principles and evidence-based practice.

Describe why it is important to ensure you follow : describe why it is important to ensure you follow the cooking temperature foumd in a dessert recipe.

User Account

All Pages