Irish firm for a domestic project

Assignment Help Business Management

Reference no: EM131019201

Your firm is based in southern Ireland (and thereby operates in euro, not pounds) and is considering an investment in the United States. The project involves selling widgets: you project a sales volume of 50,000 widgets per year, sales price of $20 per widget with a contribution margin of $15 per widget. The project will last for 5 years, require an investment of $1,000,000 at time zero (which will be depreciated straight-line to $10,000 over the 5 years). Salvage value for the equipment is projected to be $10,000. The project will operate in rented quarters: $300,000 rent is due at the start of each year. The corporate tax rate is 12½% in Ireland and 40% in the U.S. For simplicity, assume that taxes are paid like sales taxes: immediately. The spot exchange rate is $1.50 = €1.00. The cost of capital to the Irish firm for a domestic project of this risk is 8%. The U.S. risk-free rate is 3%; the Irish risk-free rate is 2%. What is CF0 in dollars?

Reference no: EM131019201

Questions Cloud

Problem regarding the average inventory : (1) How many times per year does the company turn over its inventory? (2) If the company's cost of goods sold (COGS) is 60 percent of the annual sales, what is its average inventory?

Calculate the increase in its entropy during this process : Suppose, then, that a mole of graphite is heated at constant pressure from 298 K to 500 K. Calculate the increase in its entropy during this process. Add on the tabulated value of 8(298 K) (from the back of this book) to obtain 8(500 K).

Analyze the connection between these aspects of marketing : Analyze your selected example of a health care product or service in terms of product strategy (including product life cycle and branding), price, and distribution. Include references to two or more outside resources that further your understandin..

Relationship between the ppf and technological improvements : Contrast and compare the relationship of the slope and opportunity cost of a linear PPF and a bowed-out from the origin PPF - What does this example suggest about the relationship between the PPF and technological improvements?

Irish firm for a domestic project : The cost of capital to the Irish firm for a domestic project of this risk is 8%. The U.S. risk-free rate is 3%; the Irish risk-free rate is 2%. What is CF0 in dollars?

Explain each feature of the graph briefly : Sketch a qualitatively accurate graph of the entropy of a substance (perhaps H2 O) as a function of temperature, at fixed pressure. Indicate where the substance is solid, liquid, and gas. Explain each feature of the graph briefly.

What partial-derivative relation can you derive : What partial-derivative relation can you derive from the thermodynamic identity by considering a process that takes place at constant entropy? Does the resulting equation agree with what you already knew? Explain.

Compute the cost of the market basket for each year : For this problem assume that the market basket is defined as 1 hammer, 1 lawn mower, 1 unit of groceries for the year, and 2 bicycles. Note in this problem you may want to use a calculator and round all numbers to the nearest hundredth. Compute th..

Estimate value of t for vibrational motion of an h2 molecule : The results of either of the two preceding Qs can also be applied to the vibrational motions of gas molecules. Looking only at the vibrational contribution to the heat capacity graph for H2 shown in Figure, estimate the value of t for the vibratio..

User Account

All Pages