Determine the irr of the project

Assignment Help Finance Basics
Reference no: EM131959638

Question: Company XYZ has spent $250,000 to develop a new product - smart beehive. The company has spent $24,000 for a market research for figuring out the expected demand for the beehives. Company XYZ can manufacture the beehives for $2200 each in variable costs. Fixed costs are estimated to be $1.2 million per year. The estimated sales volume is 2000, 2400, 2800, 3400, and 3400 units per year for the next five years, respectively. The unit price of the beehive will be $3900. The necessary equipment for producing the beehives can be purchased for $8.2 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be $1.4 million. The need for the net working capital for producing the beehives will be 20 percent of next years sales. Company XYZ has a 35 percent corporate tax rate and a 12 percent required return.

What is the payback period of the project?

What is the profitability index of the project?

What is the IRR of the project?

What is the NPV of the project?

Reference no: EM131959638

Questions Cloud

Why might the financial performances differ : Compare the 8 financial ratios listed below for the four companies. Answer the following questions. Why might their financial performances differ?
What rates of interest will a and b end up paying : Assume that A wants to borrow US dollars at a floating rate of interest and B wants to borrow Canadian dollars at a fixed rate if interest.
What is the expected annual revenue : Company Z estimates it can sell 900 units of a new product a year, plus or minus 4 percent. It also estimates the selling price at $22 a unit, plus or minus.
Which project has the higher equivalent annual net benefit : The company you work for is trying to decide between two projects. Project 1 costs dollar 150,000 up front, and has an expected life of 4 years.
Determine the irr of the project : Company XYZ has spent $250,000 to develop a new product - smart beehive. The company has spent $24,000 for a market research for figuring out the expected.
What uniform series of payments will cover the expenses : The cost of maintaining a factory is expected to be 100,000 in the first year and increase by 12,000 per year during a 20 year period.
Find what is the current stock price : Company X is expected to pay an end-of-year dividend of $4.00 a share. After the dividend its stock is expected to sell at $90.
Discuss the use of cash budgets : The company would like to prepare a cash budget for the months of April, May, and June. The relevant details are given below (figures given are in $000).
Explain difference between discount loans and fed funds : Compare checking deposit, savings deposit, time deposits, and certificates of deposit. Discuss the difference between discount loans and fed funds.

Reviews

Write a Review

Finance Basics Questions & Answers

  How much must be contributed each year by jesper parnevik

jesper parnevik borrowed 70000 on march 1 2006. this amount plus accrued interest at 12 compounded semiannually is to

  What actual real rate of return did you earn

Over the past year, you earned a return of 13.6 percent on your investments. During that period, the inflation rate was 4.8 percent and the risk-free rate of return was 5.1 percent. What actual real rate of return did you earn?

  Quality is a subset of customer satisfaction

1. What are the costs associates with quality? How does quality relate to the purchasing function? 2. Quality is a subset of customer satisfaction. What is meant by this statement? What is the definition of value?

  What annual rate of return did the firm earn on this project

Cast Out Co. invested $16,200 in a project. At the end of two years, the company sold the project for $23,800. What annual rate of return did the firm earn on this project?

  What is the value per share

1. (Three-stage DDM) The current dividend for Connell Corp is $1.00. In stage 1, which lasts 3 years, the dividend will grow at 0% per year. In stage 2, which also lasts 4 years, the dividend will grow at 30% per year. Finally, in stage 3, the divide..

  What is the project profitability index

Briarcliff Stove Company is considering a new product line to supplement its range line. It is anticipated that the new product line will involve.

  Types of abs for the committee consideration

Your task is to make a presentation of 600-800 words to the committee explaining the different types of ABS for the committee's consideration. The presentation must include the following:

  Current assets and current liabilities remain constant

The company's managers want to increase the firm's inventory, which will be financed using short-term debt. How can the firm increase its inventory without its current ratio falling below 2.0 (assuming all other current assets and current liabilit..

  Supreme construction company began as a small

Supreme Construction Company began as a small commercial builder located in Baytown, Texas. Until the early 2000s, Alex Boyd, Supremes' founder, concentrated his efforts on small, freestanding shops and offices. Up to that time, Alex had never employ..

  Direct consolidation costs

Determine how are stock issuance expenses and direct consolidation expenses treated in a business combination which is accounted for as a purchase, when the subsidiary will retain its incorporation?

  What is the internal rate of return of a project

What is the internal rate of return (IRR) of a project that costs $45,000 if it is expected to generate $15,047 per year for five years?

  Chevelle inc has sales of 43500 costs of 19900 if the tax

chevelle inc. has sales of 43500 costs of 19900 depreciation expense of 1600 and interest expense of 1100.if the tax

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