How to compute the irr of the project

Assignment Help Financial Accounting
Reference no: EM132512669

Point 1: Olourun Ltd is the major employer in the Front Hill area, where the firm is located. The company is considering the acquisition of a new production line. The equipment would cost $720 000 and installation cost would amount to $59 000. At the end of its 5-year life, it is expected to be disposed of at its salvage value of $70 000. The new equipment would allow the company to expand production significantly, which would require an increase in working capital of $90 000. If the purchase is made, the firm's maintenance costs would be reduced by $60 000 annually. However, at the end of the third year, a major overhaul would have to be undertaken at a cost of $80 000. Operating cash flows would be $220 000 in the first year; this would increase by 2% for each of the following years.

Question 1: How to compute the IRR of the project and THREE non-financial factors which the firm should consider when making this decision?

Reference no: EM132512669

Questions Cloud

What is the frequency of a harmonic oscillation : What is the frequency of a harmonic oscillation if the static equilibrium position of the ball is 10 cm lower than the lower end of the spring before the ball i
How an employee would request additional tax deductions : Explain why and how an employee would request additional tax deductions at source in Canada apply for a reduction in tax deductions at source
Compare the services available and the costs of cable tv : Write approx. 300 Word Essay. Compare the services available and the costs of today's Cable TV vs Cable TV in 1977. At the end of your paper add the following.
Calculate the magnitude of the electrostatic : A particle of charge of +2.60 C is 12.0 cm distant from a second particle of charge of -1.40 C.
How to compute the irr of the project : How to compute the IRR of the project and THREE non-financial factors which the firm should consider when making this decision?
European intermodal rail-road freight transport : Discussed the expansion of the European intermodal rail-road freight transport (EIT)under the European Union.
What are the responsibilities in an organisation : Accountant in an accounting firm or an auditor, what other professional roles are available to you and what are their responsibilities in an organisation?
Frictionless inclined planes from the positions shown : Two balls A and B are simultaneously released on two frictionless inclined planes from the positions shown. The inclined planes have equal inclinations
Horizontal surface without friction : Get the speed of the system if the plasticine sticks to the block.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Difference in general and specific antiavoidance provisions

Cherrie is a resident individual. She receives the following amounts from her various investments during the year: $2,000 – Fully franked dividend from a resident public company with an imputation credit of $800. $3,000 – Un-franked dividend from a n..

  Does drop in replacement cost of drip coffee makers impact

Marley company sells drip coffee makers used in business offices. Its beginning inventory of coffee makers was 400 units at $50 each. During the year, Marley made two purchaases of coffee makers. The first purchase was 500 units at $70 per unit;  Doe..

  Considering eliminating product

Delta Aluminum’s management is considering eliminating product B, which has been showing a loss for several years. The company’s annual income statement is as follows: A B C Total Sales $2,209,000 $1,402,000 $1,805,900 $5,416,900. how many units of t..

  ACC 311 Fundamentals of Financial Accounting Assignment

ACC 311 Fundamentals of Financial Accounting Assignment Help and Solution - University of Texas, USA. What does Sheridan record as the cost of the new truck

  How reported accounting numbers might affect

Explain how reported accounting numbers might affect an individual's perceptions and actions. Cite two examples.

  What is the revenue recognition principle

what is the revenue recognition principle and what is viewed as a major criticism of GAAP regarding revenue recognition?

  How did these factors affect the net income for fiscal

Consider the overall effect of these two ratios. Did Foot Locker, Inc. improve during fiscal 2007? How did these factors affect the net income for fiscal 2007?

  Spreadsheet pensions to prepare a pension worksheet

Use the spreadsheet Pensions to prepare a pension worksheet. On the pension worksheet, compute pension expense, pension asset/liability, projected benefit obligation, plan assets, prior service cost, and net gain or loss. Recall that settlement rate ..

  Concerns about risk management the employee statement

They state it is not needed because the organization has already decided to fund the project.

  How many shares of common stock will receive dividends

What is the average price received when the common stock was initially issued? Determine What is the cost of treasury stock per share?

  Amortization expense directly with credit to patent account

A patent was acquired by Grotius Corporation on January 1, 1999, at a cost of $72,000. The useful life of the patent was estimated to be 10 years. At the beginning of 2003, Grotius spent $9,000 in successfully prosecuting an attempted infringement of..

  Delivery vehicles and became self-insured for these risks

Alex Rodriguez, a publishing Company, is preparing its Dec. 31, 2008, financial statements and must determine the proper accounting treatment for the following situations. A. Rodriguez sells subscriptions to several magazines for a 1-year, 2-year, or..

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