Find the irr of the food truck project

Assignment Help Finance Basics
Reference no: EM132703672

Luis is considering purchasing and operating a food truck. He estimates the cost of a fully renovated and equipped food truck to be $100,000, which would be paid in full at the beginning of the project. He estimates cash flows of $30,000, $50,000, and $70,000 at the end of years 1, 2, and 3, respectively. At the end of year 4, the truck will need to be updated, making the expected cashflow at the end of year 4 negative $80,000. Luis plans to operate the truck for one more year and then sell it, making the total cash flow at the end of year 5 $73,000. Assume the cost of capital is 20%.

Find the IRR of the food truck project and make a recommendation to Luis based on your IRR analysis.

(Please explain your process)

Reference no: EM132703672

Questions Cloud

Find the annualized interest cost : Suppose a firm is offered the following the terms are 1.1/9 net 30. Find the annualized interest cost?
What is the default risk premium on chandler bonds : Chandler Co.'s 5-year bonds yield 8.25%, and 5-year T-bonds yield 5.15%. The real risk-free rate is r* = 3.0%, the inflation premium for 5-year bonds
What is the firm weighted average cost of capital : The activities of New Corp are financed by both debt and equity. New Corp has 3 million shares of ordinary equity outstanding, currently selling for €37 per sha
Data for a hypothetical open? economy : 1) We have the following data for a hypothetical open? economy:
Find the irr of the food truck project : Find the IRR of the food truck project and make a recommendation to Luis based on your IRR analysis.
What is the value of the loan : Suppose a firm takes out a 3 year loan with a face value of $1,000,000. The current one-year risk free rate is 4.00%. You estimate that the variance
HRMM079 Managing and Organisational Behaviour Assignment : HRMM079 Managing and Organisational Behaviour Assignment Help and Solution, University of Northampton - Assessment Writing Service
Find the current price of a stock : Find the current price of a stock if it is expected to pay a dividend of $5 per year. It just paid a dividend and dividends are expected to remain constant
Determine the total cash inflows : The finance manager wants to create cash budget for the July, 2020 through December, 2020 period. The finance manager has received the following information

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculate the unlevered value of the project

Ribbon Manufacture Ltd is considering a project to produce new-tech sewing machines. The project requires $6 million investment and offers after tax free cash f

  Which description of mary has higher probability

Which description of Mary has higher probability? Mary loves to play tennis.

  Financial mangers make decisions today that will affect

financial mangers make decisions today that will affect the firm in the future.nbsp the dollars used for investment

  What is the required return for the market

If the risk-free rate is 10.2 percent and the market risk premium is 4.4 percent, what is the required return for the market?

  Beneficiary of a life insurance policy

You are the beneficiary of a life insurance policy. The insurance company informs you that you have two options for receiving the insurance proceeds.

  Evaluate how you would handle stressful situations

Evaluate how you would handle stressful situations, manage change, and stay motivated.

  What are the economic order quantity and cycle length

The demand for an item is constant at 100 units a year. Unit cost is £50, the cost of processing an order is £20 and holding cost is £10 a unit a year. What are the economic order quantity, cycle length and costs?

  What is the companys cost of equity capital

Halestorm Corporation's common stock has a beta of 1.23. Assume the risk-free rate is 4.8 percent and the expected return on the market is 12.3 percent.

  What are the earnings per share

What are the earnings per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

  What is the target stock price in one year

what is the target stock price in one year? (do not round intermediate answers, round final answer to 4 decimal places) I cannot seem to get the correct answer for this one. A walk-through would be greatly appreciated.

  Calculate the ending value-weighted index

An analyst gathered the following data about stocks J. K. L which together form a value weighted index:

  Find the time value in all of the cases

Assume that the stock price remains constant. Use the spreadsheet to find the time value in all of the cases.

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