User Account

All Pages

Does the IRR rule agree with the NPV rule

Assignment Help Financial Management
Reference no: EM131880237

You are considering opening a new plant. The plant will cost $ 98.7 million upfront and will take one year to build. After that, it is expected to produce profits of $ 29.1million at the end of every year of production. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 8.3%.Should you make the investment? Calculate the IRR. Does the IRR rule agree with the NPV rule?

Reference no: EM131880237

Questions Cloud

Series of cash flows : Consider the following series of cash flows: Payback will be smaller than discounted payback
Discuss key corrective actions in order to rectify issues : Specify two (2) legal considerations to which an organization may be susceptible if it were to implement forced ranking performance evaluation systems unfairly.
Explain the difference between audits and metrics : What are the four components of the auditing process? Which component do you feel is the most important? Explain your choice.
Prepared to make equal annual deposit into the account : you’re prepared to make equal annual deposit into the account at the end of each of the next 11 years.
Does the IRR rule agree with the NPV rule : Calculate the IRR. Does the IRR rule agree with the NPV rule?
Analyzing financial performance in the new world : In the article "Analyzing Financial Performance in the New World", what particular problem is the artice addressing as it relates to healthcare finances?
For the remainder of her life expectancy : How much money must she accumulate in order to withdraw $70,000 per year for the remainder of her life expectancy?
What is the annual receipt we make : We invest $24,000 for 10 years. We receive $11,000 10 years later. The i is 15% annually. What is the annual receipt we make?
Describe types of psychoanalytic defense mechanisms : Identify the three types of psychoanalytic defense mechanisms that groups use to avoid anxiety. Think about whether or not you have used any of them in group.

Reviews

Write a Review

Financial Management Questions & Answers

  Statement of retained earnings of gary larson publishers

The statement of retained earnings of Gary Larson Publishers is presented below.

  What will be the suggested price per share

Assume that a share of stock will pay dividends of $2 in one year, $3 in two years, and $3.50 in three years. For all years after year 3, dividends will grow at a rate of 5%. If shareholders’ required rate of return is 15%, what will be the suggested..

  Higher net profit margin than most of its competitors

If a company has a higher net profit margin than most of its competitors, this means that:

  Growing quickly-what is the current share price

Yang Corp. is growing quickly. Dividends are expected to grow at a rate of 30 percent for the next three years, with the growth rate falling off to a constant 7.5 percent thereafter. If the required return is 13 percent and the company just paid a $2..

  Pound and dollar denominated rates of return

Calculate the standard deviation of both the pound and dollar denominated rates of return if each of the nine outcomes is equally likely.

  What is malone bank profit or loss from speculation

What is Malone Bank's profit or loss from speculation if the spot rate 60 days from now is indeed $0.78?

  Which project should be accepted

Speedy Delivery Systems can buy a piece of equipment that is anticipated to provide an 11% return and can be financed at 6% with debt. Compute the weighted average cost of capital. Which project should be accepted?

  Growth rate is expected to be constant in the future

Sorenson Corp.’s expected year-end dividend is D1 = $1.60, its required return is rs = 11.00%, its dividend yield is 6.00%, and its growth rate is expected to be constant in the future. What is Sorenson's expected stock price in 7 years, i.e., what i..

  What is percentage price change of these bonds

Bond J has a coupon rate of 5 percent and Bond K has a coupon rate of 11 percent. Both bonds have 14 years to maturity, make semiannual payments, and have a YTM of 8 percent. If interest rates suddenly rise by 2 percent, what is the percentage price ..

  Calculate the fair present values of the bonds

Calculate the fair present values of the following bonds, all of which pay interest semiannually, have a face value of $1,000, have 10 years remaining to maturity, and have a required rate of return of 11 percent.

  Nature of long-term debt in firm capital structure

The inexpensive nature of long -term debt in a firm's capital structure is due to the fact that

  Calculate the expected holding-period return

The stock of Business Adventures sells for $60 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows: Dividend Stock price Boom $2.00 $73 Normal economy 1.50 63 Recession .70 59..

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd