What are the npv and irr in given

Assignment Help Finance Basics
Reference no: EM132056889

Question: 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 for $5 each with variable costs of $3 for each one produced, while annual fixed costs associated with the 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? Firm ABC is considering investing in a project to reduced cost by $60,000 annually. The equipment costs $20,000, had a 4-year life (will be depreciated as a 3-year MACRS asset: 33% for the first year, 45% for the second year, and 15% for the third year), requires no additional investment in net working capital, and has a salvage value of $40,000. The required rate of return is 10%. Tax rate is 34%. For #3 & #4 below:

What is the FCF each year?

What are the NPV and IRR? Do you accept the project? why?

Reference no: EM132056889

Questions Cloud

What is the merger premium per share : Dell has 8,000 shares outstanding at a market price of $25 a share. Neither firm has any debt. Dell is acquiring ABC for $350,000 in cash.
Calculate standard deviation of returns for company shares : Calculate the yearly returns for this share. Calculate the standard deviation of returns for the company's shares.
What net reduction in retained earnings : On that date, when the market price of Oliver was $21 per share, What NET reduction in retained earnings would result from this property dividend
Compute the present value of the woodland : Question 1: Compute the present value of the woodland. Assuming 15% required rate of return
What are the npv and irr in given : 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 for $5 each.
Trying to manage the risk associated with crude oil prices : OU Energy Company is trying to manage the risk associated with crude oil prices. What is the correct forward price for this deal?
How is weighted average yield calculated : How is weighted average yield calculated and what does it mean?
Discuss about the dividend-discount model : Procter and Gamble (PG) paid an annual dividend of $1, 75 in 2009. You expect PG to increase its dividends by 7.5% per year for the next five years.
What is the equation for the facilities cost : Professional University teaches a large range of undergraduate courses. Itis interested in te determining the cost equation for the facilities.

Reviews

Write a Review

Finance Basics Questions & Answers

  Short paper on assigning risk in various regions

Select a geopolitical entity to focus on (e.g.: European Union, BRIC nations, African subcontinent, Middle East, etc.). Then, identify and analyze the risk in these regions.

  What is the wacc of your selected company

Select a company and determine the costs of its various types of capital: Long Term debt, Preferred Stock and Common Stock. What is the WACC of your selected company?

  Discuss cash transactions for goldman incorporated

Below are cash transactions for Goldman Incorporated, which provides consulting services related to mining of precious metals.

  Main business drivers for specialty facilities

What are some of the main business drivers for specialty facilities and what value do they add to the health care delivery system?

  You will assess the recent acquisitions of your selected

this week you will assess the recent acquisitions of your selected firm. use print and online sources to collect

  What is watch ovia expected net interest income at year-end

What will net interest income be at year-end if interest rates on RSAs increase by 2 percent but interest rates on RSLs increase by 1 percent?

  How sensitive is the acquisition value to these estimates

A major concern in any DCF valuation is the accuracy of both the terminal (long-term) growth rate and discount rate estimates. How sensitive is the acquisition value to these estimates?

  Plot the payoff diagrams

Plot the payoff diagrams fur the following instruments:(a) A caplet with cap rate Rcap = 6.75% written on 3-wonth Libor Lt, that is about to expire.(b) A forward contract written on a default-free discount bond with maturity 2 years. The forward cont..

  Amortization to reflect that after ten years

Then change the amortization to reflect that after ten years, Sherry and Sam will increase their monthly payment to $7,500 per month. When will they fully repay the mortgage with this increased payment if they apply all the extra dollars above the..

  Construct a portfolio that has the same expected return

You worry that Bob's portfolio is not very diversified and consider whether he could do better investing in a combination of the riskless asset (f).

  What would be the value of mike''s savings

Mike currently 35, has $15,000 saved for retirement. He is currently saving $450 at the beginning of every month and his employer matches his total savings contribution on a monthly basis. Mike projects that he could earn 7% on his savings. He plans ..

  Determine the upward force on the glass

A glass tube having an inside diameter of 0.25 mm and an outside diameter of 0.35 mm is inserted into a pool of mercury at 20°C such that the contact angle is 13°8. Determine the upward force on the glass.

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