Determine the irr for computer system

Assignment Help Financial Management
Reference no: EM131908793

A firm is considering purchasing a computer system. The following data has been collected.

- Cost of the system: $152,000

- Project life: 6 years

- Salvage value at the end of year 6: $25,000

- Depreciation method: five-year MACRS

- Tax rate: 38%

- Annual revenue from project: $124,000

- Annual expenses (not including depreciation): $92,000

The firm will borrow the entire $152,000 at 6.5% interest to be repaid in 2 annual payments.

The firm's MARR is 18%. Determine the IRR for the computer system. Enter your answer as a percentage between 0 and 100.?

Reference no: EM131908793

Questions Cloud

What is current share price for stock : Universal Laser, Inc., just paid a dividend of $3.25 on its stock. What is the current share price for the stock?
Considering two projects for inclusion in capital budget : Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis.
Stock repurchase-what is the current share price : If the required return on this stock is 12 percent, what is the current share price?
Value of operations and intrinsic value of equity : What is the value of operations? Enter your answer in millions. $ million Immediately prior to the repurchase, what is the intrinsic value of equity?
Determine the irr for computer system : A firm is considering purchasing a computer system. Determine the IRR for the computer system.
Purchasing set of machine tools to process special orders : The Simon Machine Tools Company is considering purchasing a new set of machine tools to process special orders.
Monthly payment amortized mortgage : you have arranged to finance the remaining 130000 with a 30 year monthly payment amortized mortgage at a 6% nominal annual interest rate,
What is the effective interest rate on the loan : The loan called for a compensating balance of 13 percent. What is the effective interest rate on the loan?
Dictate process and judgment for determining fair value : Specific rules dictate the process and judgment for determining fair value. how should the valuation be calculated?

Reviews

Write a Review

Financial Management Questions & Answers

  What are the disadvantages of excessive working capital

You are thinking on drawing qualitative budget for your business. What are main prerequisites for having qualitative budget? Explain the advantages of cash flow statement: why it is important to have detailed cash flow? What are the disadvantages of ..

  Numerator in computing return on investment-flexible budget

A static budget report is appropriate for. The flexible budget report includes all of the following sections except. Controllable fixed costs are deducted from the contribution margin to arrive at.  The numerator in computing return on investment is

  Coupon rate-what is the current bond price

Ninja Co. issued 12-year bonds a year ago at a coupon rate of 8.4 percent. The bonds make semi-annual payments. If the YTM on these bonds is 6.7 percent, what is the current bond price?

  What is the company current stock price

A company just paid a dividend of $0.80 per share, What is the company's current stock price?

  Treasury bond with a par value-marginal tax bracket

Amila paid $9,600 for a Treasury bond with a par value of $10,000 and a coupon rate of 8.5 percent. Two years later, Amila sold the bond for $9,900. What are her total tax consequences if she is in a 25 percent marginal tax bracket?

  Make realistic assumpions about any missing data

Complete Dr. Beeper's federal tax return for 2015. Use form 1040 and Schedule E and form 8582. Make realistic assumpions about any missing data.

  What is the present value cost of owning the equipment

Lewis Securities Inc. has decided to acquire a new market data and quotation system for its Richmond home office. The system receives current market prices and other information from several online data services and then either displays the informati..

  Corporation currently uses an injection molding machine

The McEnally Toy Corporation currently uses an injection molding machine that was purchased 2 years ago for $8,000.

  Using the perpetual growth method

Compute the expected share price at the end of 2014 using the perpetual growth method.

  Since new stock has higher cost than retained earnings

Bankston Corporation forecasts that if all of its existing financial policies are adhered to, its proposed capital budget would be so large that it would have to issue new common stock. Since new stock has a higher cost than retained earnings, Bankst..

  Projects unit sales for new seven-octave voice emulation

Aria Acoustics, Inc., (AAI) projects unit sales for a new seven-octave voice emulation implant as follows: What is the IRR of the project?

  What is the annual total costs of cheese inventory

The company is using Economic Order Quantity model in placing the orders. What is the annual total costs of cheese inventory.

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