What are the NPV and IRR, What are the NPV and IRR? Do you

What are the NPV and IRR

Assignment Help Financial Management

Reference no: EM131551152

A product line can sell 80,000 products per year for 4 years (after which time this project is expected to shut down). The product will sell for $5 each, with variable costs of $3 for each one produced, while annual fixed costs associated with production will be $70,000. In addition, there will be a $250,000 initial expenditure associated with the purchase of new production equipment. It assumed that this initial expenditure will be depreciated using the SL method down to zero over 4 years. This project will also require a one-time initial investment of $30,000 in net working capital associated with inventory. The required rate of return is 10%. Tax rate is 40%. What are the NPV and IRR? Do you accept the project? Why?

Reference no: EM131551152

Questions Cloud

Expected return-standard deviation of return of portfolio : what are the expected return and standard deviation of the return of the portfolio? is the portfolio more risky than Safe Inc. Explain?

What risk-free dollar denominated return : what risk-free dollar denominated return can be locked in by investing in the British bills?

Financial manager with information pertaining to items : Which group of financial ratios provides the financial manager with information pertaining to items that are not necessarily contained in financial statements

What is happening to the risk profile of the us economy : Explain the phenomenon that is taking place. What is happening to the “risk profile” of the US economy?

What are the NPV and IRR : What are the NPV and IRR? Do you accept the project? Why?

Firm can increase its annual customer retention rate : What is the impact on lifetime value if a firm can increase its annual customer retention rate from 50% to 75%,

Income statement balance sheet sales : Income Statement Balance sheet Sales 30,945 Cash 2,776 Costs of Goods Sold 20,035 Accounts Receivable 226 SG&A Expenses 5,518 Inventory 3,218

Create portfolio with expected return : You have $10,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 15 percent and Stock Y with an expected return of 8 percent

Cash balances as result of implementing the lockbox system : What is the reduction in outstanding cash balances as a result of implementing the lockbox system? Cash balance reduction $?

User Account

All Pages