Calculate the net income for each year

Assignment Help Financial Management

Reference no: EM131446264

Calculate the following cash flows for each year: Initial investment $4,000,000 Project life: 4 years Revenue per year: 2,000,000 Royalty (cost) is 10% of revenue Other expenses: $100,000 DD&A (Depreciation and Amortization) : $260,000 Tax is 30% (of gross income less depreciation)

a. Calculate the net income for each year.

b. calculate the cash flow (net income + depreciation) for each year.

c. What is the net present value (NPV) for this investment (discount rate = 10%)? Should you invest and why?

d. What is the internal rate of return (IRR) for this investment?

Reference no: EM131446264

Questions Cloud

Examine ethical principles associated with the business : Explain the purpose of each, identify the key elements for each, and explain how they can affect the success of a business.

Do you believe in climate change : Do you believe in Climate Change? Why or why not? Do you believe that humans are ultimately responsible or is this natural occurrence?

Jqueryui or bootstrap components : Watch two videos on using JQueryUI or Bootstrap components. Cite the source in APA format.

What of interest has concho acquired : Calculation: COG Operating LLC owns a working interest in an oil and gas lease. Lacking the funds to develop the lease, COG assigns the working interest to Concho Resources Inc, reserving 1/32 of 6/7 of production. What of interest has Concho acquire..

Calculate the net income for each year : Calculate the following cash flows for each year: Initial investment $4,000,000 Project life: 4 years Revenue per year: 2,000,000 Royalty (cost) is 10% of revenue Other expenses: $100,000 DD&A (Depreciation and Amortization) : $260,000 Tax is 30% (of..

What is the present value and future value : What is the Present Value of $5830 to be received 8 years from today if the discount rate is 4.30%? What is the Present Value of $8920 to be received 4 years from today if the discount rate is 2.40% with quarterly compounding periods? What will be th..

Jqueryui or bootstrap components : Watch two videos on using JQueryUI or Bootstrap components. Cite the source in APA format.

Perspective of the client is known as spinning an issue : You will lay out a means to remedy the incident of your own design, paying special attention to audience and word choice while considering the sensitivity of the issue at hand.

Construct necessary documents : Skills are valuable tools to have. They show that we have the particular ability to do something-and do it well. Having skills in Microsoft Office will help you, both personally and professionally. The skills that you take away from this course wi..

User Account

All Pages