Draw a time line to show the cash flows of the project

Assignment Help Finance Basics

Reference no: EM132001587

Mini-Project 2: Capital Budgeting Analysis: The SL High Tech is planning a new investment project which is expected to yield cash inflows of $395,000 per year in Years 1 through 3, $286,000 per year in Years 4 through 6, and $278,000 in Years 7 through 10. This investment will cost the company $1,850,000 today (initial outlay). We assume that the firm's cost of capital is 7.5%.

(1) Draw a time line to show the cash flows of the project.

(2) Compute the project's payback period, net present value (NPV), profitability index (PI), internal rate of return (IRR), and modified internal rate of return (MIRR).

(3) Discuss whether the project should be taken.

Reference no: EM132001587

Questions Cloud

Calculate the coefficient of variation on each alternative : Calculate the expected rate of return on each alternative. Calculate the standard deviation of returns on each alternative.

Existing sources of data created by others : 1. Ne w sources of data designed for your purposes are 2. Existing sources of data created by others for different purposes are

What is the minimum new cash flow : What is the minimum new cash flow that the company would require to undertake the expansion?

What is the monthly deposit into the sinking fund : What is the monthly deposit into the sinking fund?

Draw a time line to show the cash flows of the project : The SL High Tech is planning a new investment project which is expected to yield cash inflows of $395,000 per year in Years 1 through 3, $286,000.

What is your estimate of the company stock price : Hawley Corp. had sales of $95 million for the current year. The corporate tax rate is 35 percent. What is your estimate of the company’s stock price?

Make the project acceptable to the company : What is the minimum probability of success that will make the project acceptable to the company?

What is the mirr of the sports facility : If the appropriate reinvestment rate for the sports facility is 11.5?%, what is the MIRR of the sports facility? What is the MIRR of the restaurant?

What is the probability that 2 or more : What is the probability that 2 or more would have an IQ greater than 140. Represent your solution as an expression of ?=p(IQ>140) and give ?.

User Account

All Pages