Calculate the irr

Assignment Help Financial Accounting
Reference no: EM132998764

Question - Lugar Industries is considering an investment in a new machine with the following information:

Machine cost 250,000

Salvage value 50,000

Life 5 years

Working Capital $0 (no working capital needed)

Net operating expense savings:

End of Year 1 $50,000

End of Year 2 $90,000

End of Year 3 $110,000

End of Year 4 $120,000

End of Year 5 $120,000

WACC 10%

Tax rate 40%

Assumed salvage value of the machine at end of 5 years is $50,000 (You will sell this machine at the end of the project for $50,000)

If Lugar buys the machine, calculate the following answers. Remember to include the impact of depreciation, taxes, and salvage value.

Based on the above information, calculate the IRR. (Round you answer to the nearest two decimal places. Do not use %.

Reference no: EM132998764

Questions Cloud

Journalize the transactions for viking corporation : During 2020, its first year of operation, the company had profit of $200,000. Journalize the transactions for Viking Corporation
Identify the rate determining step : How many steps are there in the reaction and Is the overall reaction endothermic or exothermic
What is the market price face value bond : Wine and Roses, Inc. offers a 7 percent coupon bond with semiannual payments and a yield to maturity of 7.73 percent. What is the market price face value bond
Which jason engaged in : company as well as the knowledge, skills, and abilities necessary to perform the job and the environment in which the job will be performed. Jason engaged in
Calculate the irr : Assumed salvage value of the machine at end of 5 years is $50,000 (You will sell this machine at the end of the project for $50,000) Calculate the IRR
What alaric action is based on : Alaric, announces that employees who run ad campaigns resulting in $2,000 or more in sales will receive a $100 bonus. Alaric's action is based on
What is the value of current liabilities : Mylex has current assets of $95, net fixed assets of $250, long-term debt of $45, and owners' equity of $200, what is the value of current liabilities
How much is the asset revaluation : Danni will contribute P84,000 in cash to the partnership and also pay P10,500 for 15% of Bianca's share. How much is the Asset Revaluation
What obstacles did you encounter in coming to a consensus : What obstacles did you encounter in coming to a consensus? What did you enjoy most about this activity? What did you enjoy least?

Reviews

Write a Review

Financial Accounting Questions & Answers

  What annual rate of return did earn on the account

You deposited $113 into an account 12 years ago for an emergency fund. Today, that account is worth $137. What annual rate of return did you earn

  End of the period to measure income properly

A large auto manufacturer sells large fleets of vehicles to auto rental companies, such as Budget and Hertz. Suppose Budget is negotiating with the auto manufacturer to purchase 827 vehicles. Salary expense of $38,000 is accrued at the end of the per..

  Explain how albany corp can reduce ita economic exposure

All other expenses are in U.S. dollars. Explain how Albany Corp. can reduce ita economic exposure to exchange rate fluctuations

  Calculate the dollar sales needed to attain a target profit

Calculate the dollar sales needed to attain a target profit of $8,000. (Round your intermediate calculations to the nearest whole number.)

  Find the difference between positive and normative

find the difference between positive and normative economics? which is more prevalent in todays economics? why?find

  Discuss success and anticipated future success

On the basis of this success and anticipated future success, the following free cash flows were projected

  What should mack pay for each bike

If the manufacturer's list price is $663, what should Mack pay for each bike if he orders 110 bikes at a time, assembles the bikes, and displays and advertises

  Determine what will be change in the firm total monthly

Determine what will be change in the firm total monthly profits on a present value basis if credit is offered to all customers,If interest rate is 1% per month

  Calculate the consumption ratios for each activity

Calculate the consumption ratios for each activity. Group activities based on the consumption ratios. Calculate a rate for each pooled group of activities. Using the pool rates, calculate unit product costs.

  Determine the effect of each transaction and the balances

Determine the effect of each transaction and the balances. For those boxes in which you must enter subtractive or negative numbers use a minus sign.

  Illustrate what were the total manufacturing costs incurred

Direct materials used in production totaled $330,000. Direct labor was $415,000 and manufacturing overhead was $220,000. Illustrate what were the total manufacturing costs incurred for the month?

  How many more shares can be issued without the approval

How many more shares can be issued without the approval of shareholders? How many shares are outstanding? How many shares are issued?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd