What is the initial outlay of the project

Assignment Help Accounting Basics
Reference no: EM132562473

Question - Maju Construction (MCo) Sdn. Bhd. is bidding on a contract to build four tiny camping house (TCH) a year for the next three years for Sintokian campsite. Each TCH will be sold at the price of P. The project requires the purchase of RM132,000 of equipment which will be depreciated using simplified straight-line depreciation to a zero book value over the three years. The equipment can be sold at the end of the project for RM80,000. MCo will also need RM32,000 in net working capital over the life of the project. The fixed costs will be RM36,000 a year and the variable costs will be RM176,000 per TCH. MCo required rate of return is 14% for this project and the tax rate is 24%.

Required -

i) What is the initial outlay of the project?

ii) What is the annual cash flows of the project.

iii) What is the terminal cash flows of the project.

iv) What is the minimum amount that MCo should bid per TCH if the company required NPV of RM20,000 on this project?

Reference no: EM132562473

Questions Cloud

Discuss about the hrm and the organization : There are many issues affecting organizations today, such as employee retention, flexible work schedule, contingent workforce, talent management, and work-life.
Find how much revenue must be generated : Find How much revenue must be generated to produce $80,000 of pretax earnings? How many pairs of glasses would this level of revenue represent?
Record the transactions for the month of September : Record the transactions for the month of September in the journals provided below Total the special journals. Ignore narrations
Potential areas of cross jurisdiction-mission area overlap : Conduct an analysis of the DHS headquarters directorate and operating agencies. Identify potential areas of cross jurisdiction or mission area overlap.
What is the initial outlay of the project : MCo will also need RM32,000 in net working capital over the life of the project. What is the initial outlay of the project
Demonstrate what should the price of the diagnostic kit : Demonstrate what should the 1998 price of the diagnostic kit be if Harar is to make the same Br 200,000 profit before income taxes?
Define what herzberg would categorize as motivational factor : If you have taken the time to review Herzberg's work, you may have learned that people accept a job and stay on the job for different motivational reasons.
Find what is its operating income at br sales : Find What is its operating income at Br 1,200,000 sales? Meta Company has fixed costs of Br 100,000 and breakeven sales of Br 800,000.
Calculate the ending capital balances for shawn : Calculate the ending capital balances for Shawn and Dan. Show the entries to close the withdrawal account, and show the entry to close net income

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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