Calculate the projects net present value

Assignment Help Corporate Finance
Reference no: EM13878804

Trigger PLC is a manufacturer of computer components and a decision is required on a proposal to invest £1,800,000 on a new machine in order to move into a new market for components. The financial details are as follows:

Initial investment: £1,800,000

Life of project: 10 years Net cash flows:

years 1-6 £500,000 per year years 7-10 £300,000 per year

Residual value £500,000

The company has a target rate of return of 11% and a payback criterion of 4 years.

(a) Calculate the payback period.

(b) Calculate the project's net present value.

(c) Advise the company on whether it should proceed with the project. Provide reasons for your advice.

Reference no: EM13878804

Questions Cloud

Costs allocated to production for steamco corporation : Using the reciprocal method spreadsheet (shown in Exhibit), show the costs allocated to production for Steamco Corporation. Use the data in Problem 11-49.
Solve dp to minimize total purchase plus storage costs : Assume no inventories are desired at the end of March, and there are no beginning inventories in January. Solve this exercise using DP to minimize total purchase plus storage costs.
What are some important news technology : What are some important news, technology, and market trends to pay attention to in the financial services industry, specifically regarding stock brokerage, stock trading, and venture capitalism?
What is the present value or net present value : A.  What is the present (Year 0) value if the opportunity cost (discount) rate is 10 percent?  B. Add the outflow (or cost) of $1,000 at Year 0.  What is the present value (or net present value) of the stream?
Calculate the projects net present value : Calculate the payback period. Calculate the project's net present value. Advise the company on whether it should proceed with the project. Provide reasons for your advice.
What is the value of coefficient of correlation : What is the value of coefficient of correlation (Use Megastat )
Calculate the net present value of the given project : Calculate the net present value of the project. Provide a commentary on the dis- counting process and on the net present value that you have calculated.
How to validate costs and certify cost and pricing data : Determine the substantive means by which the Buy American Requirements would benefit both VectorCal and your new company. Provide a rationale for your response.
Solve this as an integer programming problem : Solve this as an integer programming (IP) problem, where the objective is to maximize total expected return from these projects. Assume that each project is either funded (1) or not funded (0).

Reviews

Write a Review

Corporate Finance Questions & Answers

  Impact of the global economic crisis on business environment

This paper reviews the article of ‘the impact of the global economic crisis on the business environment' that is written by Roman & Sargu (2011).

  Explain the short and the long-run effects on real output

Explain the short and the long-run effects on real output, price, and unemployment

  Examine the requirements for measuring assets

Examine the needs for measuring assets at fair value in accounting standards

  Financial analysis report driven by rigorous ratio analysis

Financial analysis report driven by rigorous ratio analysis

  Calculate the value of the merged company

Calculate the value of the merged company, the gains (losses) to each group of shareholders, NPV of the deal under different payment methods. Synergy remains the same regardless of payment method.

  Stock market project

Select five companies for the purpose of tracking the stock market, preparing research on the companies, and preparing company reports.

  Write paper on financial analysis and business analysis

Write paper on financial analysis and business analysis

  Intermediate finance

Presence of the taxes increase or decrease the value of the firm

  Average price-earnings ratio

What is the value per share of the company's stock

  Determine the financial consequences

Show by calculation the net present value for the three alternatives (no education, network design certification, mba). Also, according to NPV suggest which alternative you advise your friend to choose

  Prepare a spread sheet model

Prepare a spread sheet model for the client that determines NPV/IRR with and without tax.

  Principles and tools for financial decision-making

Principles and tools for financial decision-making. Analyse the concept of corporate capital structure and compute cost of capital.

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