Determine the profitablity index under assuptions

Assignment Help Other Subject

Reference no: EM13334575

Dunn Manufacturing corporation is considering the purchase of a factory that maks values. these would be used by dunn to manufacture water pumps. the purchase would require an initial outlay of $1449968. the factory would have anestimated life of ten years and no residual value. currently, the compny buys 500,000 values per year at a cost of $1.50 each. if the factory were purchased, the values could be manufactured for $0.90 each.

Required:

a) determined the net present value of the proposed project and whether it should be accepted under each of the following assuptions.

1. the cost of capital is 12%

2. the cost of capital is 14%

3. the cost of capital is 16%

b) determine the profitablity index under the following assuptions.

1. the cost of capital is 12%

2. the cost of capital is 14%

3. the cost of capital is 16%

c) determne the internal rate of return of the proposed project and indicate whether it should be accepted under each of the folowing assuptions.

1. the cost of capital is 12%

2. the cost of capital is 14%

3. the cost of capital is 16%

Reference no: EM13334575

Questions Cloud

What frequency does a person in the car hear : An ambulance moving at 37 m/s sounds its siren whose frequency is 500 Hz. What frequency does a person in the car hear as the ambulance approaches the car

Explain what simple test would distinguish co3 and no3 : What simple test (other than a specific confirmation test) would distinguish between CO3 and NO3

Justices scalia and thomas mean by a color-blind : What do Justices Scalia and Thomas mean by a "color-blind" Constitution?

What is the largest root-mean-square current : You have a special lightbulb with a very delicate wire filament. What is the largest root-mean-square current you can run through this bulb

Determine the profitablity index under assuptions : Determined the net present value of the proposed project and whether it should be accepted under each of the following assuptions. determne the internal rate of return of the proposed project and indicate whether it should be accepted under each of t..

Obtain the phase angle between current and source voltage : A series AC circuit contains a resistor, an inductor of 230 mH, a capacitor of 4.30 µF, and a source with ?Vmax = 240 V operating at 50.0 Hz. obtain the phase angle between the current and the source voltage

Compute the labor rate variance and efficiency variance : Compute the materials price variance and the materials quantity variance and compute the labor rate variance and the labor efficiency variance.

Evaluate the standard free energy change : Calculate the standard free energy change at 25 degree Celsius with F=96,500 for 3Fe^2+(aq) + 2Cr(s) --> 3Fe(s) + 2Cr^3+(aq)

Bell mountain should purchase the system which year : Bell Mountain Vineyards is considering updating its current manual accounting system with a high-end electronic system. While the new accounting system would save the company money,

User Account

All Pages