Compute the internal rate of return for this project

Assignment Help Financial Management

Reference no: EM131556143

"A computer manufacturing company is considering a retooling project with the following finanical information. The project costs $0.682 million and has a 3-year service life. The project will earn $393,000 in additional revenue per year and cost $41,000 in additional expenses per year. The retooling project can be classified as a seven-year property under the MACRS rule. At the end of year 3, any assets held for the project will be sold. The salvage value will be $75,000. The firm will borrow $341,000 for the project at an interest rate of 12%. The firm will repay the loan with 3 equal annual payments. The firm's tax rate is 35%. Compute the internal rate of return for this project. Express your answer as a percentage. Note: the IRR could be a negative number depending on which version of the question you receive."

Reference no: EM131556143

Questions Cloud

Determining the feasibility of investing in training : Write five to six page essay on determining the feasibility of investing in training the existing workers than hiring new ones

Compute the value of company bonds : Compute the value of Flower Valley Company bonds if investors’ required rate of return is 8.66 percent.

What is the probability of meeting the npv for investments : Unfortunately, the Capital Investment Committee refused to approve your recommendation (from above) since you did not consider the uncertainty inherent.

Constructing an investment strategy : Which of the following decisions are involved with constructing an investment strategy? What asset classes should be considered for investment?

Compute the internal rate of return for this project : The firm will repay the loan with 3 equal annual payments. The firm's tax rate is 35%. Compute the internal rate of return for this project.

Breakeven point in terms of total sales dollars : How do I figure out the breakeven point in terms of total sales dollars?

What rate would you expect to pay for semiprivate room today : HOSPITAL COSTS If the cost of a semiprivate room in a hospital was $580/day 5 yr ago and hospital costs have risen at the rate of 8%/year since that time.

How much should typical family of four expect to spend food : FAMILY FOOD EXPENDITURE Today a typical family of four spends $600/month for food. If inflation occurs at the rate of 5%/year over the next 6 yr.

Expected return on risky asset is composed of three factor : In general, the expected return on any risky asset is composed of three factors; which one of the four factors listed is not one of them?

User Account

All Pages