What are the worst case and best case irrs

Assignment Help Financial Management

Reference no: EM13849851

The staff of Jefferson Medical Services has estimated the following net cash flows for a food services operation that it may open in its outpatient clinic:

Year Expected Net Cash Flow

0 ($100,000)

1 $30,000

2 $30,000

3 $30,000

4 $30,000

5 $30,000

5 (salvage value) $20,000

The Year 0 cash flow is the net investment outlay, while the final amount is th terminal cash flow. (The clinic is expected to move to a new building in five years.) All other flows represent net operating cash flows. Jefferson’s corporate cost of capital is 10 percent.

Now, assume that the operating cash flows in Years 1 through 5 could be as low as $20,000 or as high as $40,000. Furthermore, the salvage value cash flow at the end of Year 5 could be as low as $0 or as high as $30,000. What are the worst case and best case IRRs? The worst case and best NPVs?

Reference no: EM13849851

Questions Cloud

Type of proforma method-incremental changes : With this type of proforma method, we look ahead on our balance sheet for large, incremental changes such as the expansion of a new factory. In this fashion, we are able to identify financing needs

The value of ngo''s on global governance : This week we discussed the value of NGO's (non-governmental organizations) have on global governance. Using the internet, select any NGO of your choice and submit a 3-5 page paper on how you feel they are impacting global governance. The influence..

Compute the exponentially smoothed forecast of calls : Compute the exponentially smoothed forecast of calls for each week. Assume an initial forecast of 50 calls in the first week and use Alpha(a)=0.1. What is the forecast for the 25th week?

What do you feel about factor to the washington consensus : What do you feel as been a contributing factor to the ‘Washington Consensus' policies in the United States? Has this significantly changed from the 20th century to the current timeframe

What are the worst case and best case irrs : The staff of Jefferson Medical Services has estimated the following net cash flows for a food services operation that it may open in its outpatient clinic: What are the worst case and best case IRRs? The worst case and best NPVs?

Faces as well as major risk that the industry faces : Highlight some of the major risks Procter and gamble faces as well as major risk that the industry faces.

What key elements have allowed many chinese to raise : What key elements have allowed many Chinese to raise their standard of living and how does this support or contradict their political ideology

The discounted payback as compared to the payback method : The discounted payback as compared to the payback method will

Draw,label and describe the cell shape : Draw,label and describe the cell shape and arragement of all eight epithelial tissue types

User Account

All Pages