Computation of npv and irr

Reference no: EM1314179

Computation of NPV and IRR

The plant will cost $100 million upfront and will take one year to build. After that, it is expected to produce profits of $30 million at the end of every year of production. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 8%. Should you make the investment? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. Does the IRR rule agree with the NPV rule?

Reference no: EM1314179

Questions Cloud

Prepare journal entries and preparation of balance sheet : Recording Journal Entries and preparation of balance sheet and the post-closing trial balances of two proprietorships on January 1, 2008

Journalize april transactions using a periodic system : Journalize the April transactions using a periodic system and At the beginning of the current season on April 1, the ledger of Four Oaks Pro Shop showed Cash $2,500; Merchandise Inventory $3,500; and Common Stock $6,000.

Computation of payback period : Computation of payback period and you expect that it will generate additional revenue of $500 per month

Evaluate the relevant cost of making : Compute the relevant cost of (a) making and (b) purchasing the component. Which alternative isles costly and by how much and What qualitative factors might influence the decision about whether to make or to buy the component?

Computation of npv and irr : Computation of NPV and IRR and computation the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged

Find the wacc and cost of common equity : WACC and cost of common equity - If the firm's net income is expected to be $1.1 billion, what portion of its net income is the firm expected to pay out as dividends?

Objective type questions on payback period, npv and irr : Objective type questions on payback period, NPV and IRR and what is the internal rate of return on this project

Determine the company''s expected growth rate : The company's retained earnings are adequate to provide the common equity portion of its capital budget. Its expected dividend next year (D1) is $3 and the current stock price is $35. Determine the company's expected growth rate?

Objective type questions on payback period npv irr and mirr : Objective type questions on payback period, NPV, IRR and MIRR and What is the internal rate of return that Jamaica can earn on this project

User Account

All Pages