Using the internal rate of return method

Assignment Help Financial Management
Reference no: EM131013451

King’s Department Store is contemplating the purchase of a new machine at a cost of $22,802. The machine will provide $3,500 per year in cash flow for nine years. King’s has a cost of capital of 10 percent. Using the internal rate of return method, evaluate this project and indicate whether it should be undertaken.

Reference no: EM131013451

Questions Cloud

Calculate magnitude of required dv and change in flight path : An earth satellite has a perigee altitude of 1270 km and a perigee speed of 9 km/s. It is required to change its orbital eccentricity to 0.4, without rotating the apse line, by a delta-v maneuver at q ¼ 1000. Calculate the magnitude of the requir..
What is the balance in estimated warranty liability : What is the balance in Estimated Warranty Liability at 12-31-X4 and the balance in Warranty Expense for 20X4, respectively?can you please snow the work, so I can understand the concept of this questiona. $150,000;nbsp; 30,000b. $190,000; nbsp; 30,000..
Payments made out of a firms earnings to its owners : Payments made out of a firm's earnings to its owners in the form of cash or stock are called: A. dividends. B. distributions. C. share repurchases. D. payments-in-kind. E. stock splits.
From a tax-paying investors point of view : From a tax-paying investor's point of view, a stock repurchase: A. is equivalent to a cash dividend. B. is more desirable than a cash dividend. C. has the same tax effects as a cash dividend. D. is more highly taxed than a cash dividend. E. creates a..
Using the internal rate of return method : King’s Department Store is contemplating the purchase of a new machine at a cost of $22,802. The machine will provide $3,500 per year in cash flow for nine years. King’s has a cost of capital of 10 percent. Using the internal rate of return method, e..
Calculate the magnitude of the required delta-v : With a single delta-v maneuver, the earth orbit of a satellite is to be changed from a circle of radius 15,000 km to a collinear ellipse with perigee altitude of 500 km and apogee radius of 22,000 km. Calculate the magnitude of the required delta-..
Standby underwriting arrangement provides : A standby underwriting arrangement provides the:
What is the greatest domestic terrorist threat : What is the greatest domestic terrorist threat the United States faces today? How might this threat change in the next five years
Compute the profit margin-compute the ratio on assets : Using the income statement for Time Mirror and Glass Co., Compute the following ratios Time Mirror and Glass Co. Income Statement Sales 126,000 Cost of Goods Sold 93000 Gross Profit 33,000 Selling and Administration Expenses 11,000. Compute the profi..

Reviews

Write a Review

Financial Management Questions & Answers

  Expected return on the portfolio

You own a portfolio that has $3,600 invested in Stock A and $4,600 invested in Stock B. If the expected returns on these stocks are 10 percent and 13 percent, respectively, what is the expected return on the portfolio?

  Long-term financing needed

At year-end 2013, Wallace Landscaping total assets were $1.9 million and its accounts payable were $335,000. Sales, which in 2013 were $2.8 million, are expected to increase by 30% in 2014. Total assets and accounts payable are proportional to sales,..

  What is the cost of equity

Suppose you borrow $50000 when financing a coffee shop which is valued at $75000. You expect to generate a cash flow of $84000 if demand is as expected. The cost of debt rate.3) What is the cost of equity?

  Paying the dividend and equity cost of capital

Evco, Inc., has a current price of $50 and will pay a $2 dividend in 1 year, and its equity cost of capital is 15%. What price must you expect it to sell for right after paying the dividend in 1 year in order to justify its current price?

  Using economic decision theory

Suppose you are considering either working through school or taking out loans. If you work at a 20 hour job at $15 per hour over 50 weeks per year, you can make $15,000, but it will take 5 years to graduate. How many years will it take to pay back th..

  Calculate the EAC for both conveyor belt systems

Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $232,000, has a four-year life, and requires $73,000 in pretax annual operating costs. Calculate the EAC for both conveyor belt sys..

  The hotel to obtain maximum protection for the equipment

Terry is a computer salesperson, she is staffing a booth at a computer expo and has bought with her approximate $30000 worth of laptops what must she do vis-a vis the hotel to obtain maximum protection for the equipment? what if she fails to do so?

  Calculate the depreciation charge and book value for years

Earth-moving equipment having a first cost of $82,000 is expected to have a life of 18 years. The salvage value at the time is expected to be $15,000. Calculate the depreciation charge and book value for years 2, 7, 12, and 18 using: The straight-lin..

  About the merger valuation

Harrison Corporation is interested in acquiring Van Buren Corporation. Assume that the risk-free rate of interest is 6% and the market risk premium is 8%. Harrison estimates that if it acquires Van Buren, the year-end dividend will remain at $2.80 a ..

  Compute the discounted payback statistic for project

Compute the Discounted Payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 11 percent and the maximum allowable discounted payback is..

  Expand production capacity

A manufacturing company is purchasing a new machine for $380,000 to expand its production capacity. It will cost an additional $30,000 to do the site preparation. With the new machine installed, the company expects to increase its revenue by $91,000 ..

  Suppose unit variable cost estimates are good

Project Parameters Capital Investment $1,675,000 Life 6 years Depreciation S/L to $0 Projected Unit Volume 91,000 Unit Variable Cost $21.40 Unit Price $35.95 Annual Fixed Costs $775,000 Tax Rate 35% Required Return 11% Questions 1. Suppose unit sales..

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