Determine the company rate of return on this investment

Assignment Help Financial Management
Reference no: EM131055238

A small start-up company invested in a new plant with an initial cost of $10 million. Operating costs for the plant were $3 million per year for 7 years. There was a special one-time charge of $1 million in year 2 to correct unexpected equipment problems. Revenues were $3 million in year 1, and increased by $1 million per thereafter through year 7. Determine the company's rate of return on this investment.

Reference no: EM131055238

Questions Cloud

Explain what is the bounded rationality : Explain what Bounded Rationality is. Then discuss how this concept can affect the decision situation in SLP 1. Also discuss how this concept can affect the data analysis in Case 1.
Applications of complex mathematical concepts : Investigate practical applications of complex mathematical concepts and gain understanding of how mathematics is used in engineering context.
Reduce staff availability and what adjustments : In long-term project planning, it is wise to assume that staff will be available for project work for less than 100 per cent of the total available time. What factors will reduce staff availability and what adjustments should be made for them?
Extrapolating the total development effort : The analysis effort and programming methods both rest on the principle of extrapolating the total development effort from detailed estimates of one phase of the project. Describe the approach taken in each of these methods and show in what circums..
Determine the company rate of return on this investment : A small start-up company invested in a new plant with an initial cost of $10 million. Operating costs for the plant were $3 million per year for 7 years. There was a special one-time charge of $1 million in year 2 to correct unexpected equipment prob..
Calculations within capital budgeting : Define and discuss implementation of the following calculations within capital budgeting: IRR, NPV, and Marginal Cost of Capital. When would these be used and what do they tell us?
Restaurant supplies expects its revenues and payments : Eddie's Bar and Restaurant Supplies expects its revenues and payments for the first part of the year to be: Sales payments January $24,000 $18,000 February $20,000 $21,300 March $35,000 $19,100 April $22,000 $22,400 May $28,000 $14,700 Eighty percent..
Major network security organizations : As a member of the Network Security group, you have been asked to serve on the committee and to take the initiative in the following Describe the major network security organizations.
Efficient use of the computing hardware : We have stressed the need for an operating system to make efficient use of the computing hardware. When is it appropriate for the operating system to for sake this principle and "waste"resources? Why is such a system not really wasteful.

Reviews

Write a Review

Financial Management Questions & Answers

  What price should he offer to pay for the house

Doug decided to purchase the run-down one-bedroom home next door to clean up the neighbourhood and, hopefully, make a profit. As he starts into repairs, he discovers rotting floorboards throughout the first floor, running up his repair cost an additi..

  Level production-what should be their average inventory

Warren Enterprises expects 20,000 unit sales, has ordering costs of $20 per order, carrying costs of $1.00 per unit, and desires to keep 100 units in safety stock. Assuming level production, what should be their average inventory?

  Which position you would take and why you expect to profit.

Assume that you want to speculate on how six month cash market LIBOR now equal to 1.95% will move over the next year. You believe that consensus forecasts of future rates are too high. You can enter into an FRA and agree either to pay 2.25 percent an..

  Distinguish between the types of bonds

Distinguish between the types of bonds. What factors determine their value? Explain three important relationships that exist in bond valuation. Distinguish between preferred stock and common stock. Compare valuing preferred stock and common stock.

  Data needed to evaluate this capital investment project

What types of decisions need to be made when healthcare companies are getting ready to make an investment and indicate the main kinds of information/data needed to evaluate this capital investment project?

  Discuss the major capital budgeting methods

Discuss the major capital budgeting methods used by corporations to evaluate projects. Why do many corporations continue to use the payback period method? Which method do you prefer: Explain why you prefer this method?

  What is the retained earnings balance at the end of the year

Cindy's Crafts had beginning retained earnings of $51,200. During the year, the company reported sales of $112,400, costs of $75,800, depreciation of $9,100, dividends of $1,500, and interest paid of $2,300. The tax rate is 34 percent. What is the re..

  Shares outstanding-market-to-book ratio

In November 2009, Mises Co. had a share price of $40.20. They had 90.33 million shares outstanding, a market-to-book ratio of 4.00. In addition, Mises had $850.01 million in outstanding debt, $165.00 million in net income, and cash of $250.09 million..

  What are the components of noninterest expense

What are the components of noninterest expense?

  Different forms of the efficient markets hypothesis

An investment of £100,000 is expected to produce an annual net cash flow of £20,130 for each of the next ten years. Calculate the NPV of the investment if the required rate of return is 9 percent and Draw a diagram illustrating a straddle, using c..

  Draw policy conclusions from the barings case

Have global financial markets become safer or riskier thanks to the presence of derivative instruments? Elaborate your argument using financial and economic analysis

  Calculate the expected return of your portfolio

Suppose you manage a stock portfolio with a beta of 1.3. There is no dividend yield and the risk-free rate is 3.4% per annum. In 4 months, the S&P500 index changes by 10%. Calculate the expected return of your portfolio in 4 months.

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