Tranter inc is considering a project that would have a

Assignment Help Finance Basics

Reference no: EM13484104 , Length: 20

Tranter, Inc., is considering a project that would have a ten-year life and would require a $1,500,000 investment in equipment. At the end of ten years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows:

Sales		$2,000,000
Less variable expenses		1,100,000
Contribution margin		900,000
Less fixed expenses:
Fixed out-of-pocket cash expenses	$500,000
Depreciation	150,000	650,000
Net operating income		$ 250,000

All of the above items, except for depreciation, represent cash flows. The company's required rate of return is 12%.

Required:

a. Compute the project's net present value.

b. Compute the project's internal rate of return to the nearest whole percent.

c. Compute the project's payback period.

d. Compute the project's simple rate of return.

Reference no: EM13484104

Questions Cloud

Prepare matthews delivery services income statement and : matthews delivery service inc. completed the following transactions during its first month of operations for january

The working capital will be released for use elsewhere at : the following data concern an investment projectinvestment in equipment10000net annual cash inflows2400working capital

Allen companys required rate of return is 12 the company is : allen companys required rate of return is 12. the company is considering the purchase of three machines as indicated

Suppose that the two streams are combined into one project : calculating irr - consider two streams of cash flows a and b. stream as first cash flow is 8900 and is received three

Tranter inc is considering a project that would have a : tranter inc. is considering a project that would have a ten-year life and would require a 1500000 investment in

Journalize the following transactions 1 bought 20000 of : journalize the following transactions1 bought 20000 of inventory on account from a vendor.2 billed customers 670000 for

Cash flows - ritter corporations accountants prepared the : cash flows - ritter corporations accountants prepared the following financial statements for year-end 20101. explain

A stock is expected to pay a dividend of 050 at the end of : a stock is expected to pay a dividend of 0.50 at the end of the year that is d1 0.50 and it should continue to grow at

Using the market data in show the net terminal value of a : using the market data in show the net terminal value of a long position in one 108.5 sep japanese yen european call

User Account

All Pages