For the firm to break-even on their investment

Assignment Help Financial Management
Reference no: EM131625310

5. A new product will cost $750,000 to design, test prototypes, and set up for production. The net revenue in the first year is projected to be $225,000. Marketing expects that the net revenue will increase by $25,000 per year as the product's advantages become more widely known. The firm manufacturing the product requires a rate of return equal to 12% per year. How long will it take in years (to the nearest two decimal places) for the firm to break-even on their investment?

Reference no: EM131625310

Questions Cloud

What is the expected rate of return of this project : What is the expected rate of return of this project?
Grouping expenses by cost center : Laboratory expenses and Laundry expenses are likewise grouped into their own cost centers.
Establish an individual retirement account : You establish an Individual Retirement Account (IRA) with an interest rate of 6.2%, compounded annually.
What would the cash option payout? be : This week the lottery is worth ?$8 million to a single winner. What would the cash option payout? be?
For the firm to break-even on their investment : How long will it take in years (to the nearest two decimal places) for the firm to break-even on their investment?
What is the npv of the investment opportunity : What is the NPV of the investment opportunity if the interest rate is 8% per? year? Should you take the? opportunity?
Should you undertake the investment? opportunity : What is the NPV of the investment? opportunity? Should you undertake the investment? opportunity?
Calculate depreciation expense : Calculate the depreciation expense for 2016.
Change in wealth because of the discovery of the project : What is your change in wealth because of the discovery of the project?

Reviews

Write a Review

Financial Management Questions & Answers

  Suppose the international parity conditions hold

Suppose the international parity conditions hold. Does that mean that the nominal interest rates would be equal among countries? Why or why not?

  Find lying around after they have harvested their money

Bill and Sally both have $3,000 to save that they find lying around after they’ve harvested their money tree all year.

  Smaller stocks have lower returns than larger stocks

On average, smaller stocks have lower returns than larger stocks? On average, Treasury bills have higher returns than stocks. Portfolios of smaller stocks are typically lss volatile than individual small stock

  What is the value of this stock today if the required return

Gorgon Stoneworks Co. does not expect to pay any dividends for the next three years. Four years from now, the firm hopes to pay $.61 a share and double that amount each year for the following three years. After that, the dividend is expected to incre..

  Waste management-the expense recognition principle

Consult Paragraphs 5-6 of PCAOB Auditing Standard No. 15. As an auditor, what type of evidence would you want to examine to determine whether Waste Management's decision to change the useful life and salvage value of its assets was appropriate under ..

  Maximizing firm value and minimizing the cost of capital

Which of the following are equivalent under M&M proposition I? Maximizing firm value and maximizing firm profit. Maximizing firm value and minimizing the cost of capital

  Minimum amount of collateral necessary to achieve repayment

What is the minimum amount of collateral necessary to achieve repayment, assuming all collateral is lost when the borrower runs away with the profits?

  Discount the payments to find amount borrowed by lsc

At what rate would you discount the payments to find amount borrowed by LSC?

  Coupon bond with a yield-to-maturity

A company offers a 6% coupon bond with a yield-to-maturity of 6.5% compounded semi-annually. The bond pays interest semi-annually and matures in twelve years. If the par value is $1,000, then what is the current bond price? Round your answer to two d..

  Break-even and taxes-financial break-even quantities

Consider a project to supply Detroit with 35,000 tons of machine screws annually for automobile production. You will need an initial $5,200,000 investment in threading equipment to get the project started; the project will last for five years. Find t..

  What is current stock price per share

Dave Inc. recently hired you as a consultant to handle project valuation. You have obtained the following information. The firm has 2 million shares of common stock outstanding. The common stock just paid a dividend of $1. It is expected to grow by 3..

  What is the fair value of preferred stock for that investor

Pioneer's preferred stock is currently selling for $33.00 in the market and pays a $3.60/share annual dividend (or $0.90/share quarterly dividend). A. If an investor's required rate of return on Pioneer's preferred stock is 10% p.a., what is the fair..

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