Reference no: EM133128092
Questions -
Q1. On Halloween this year (10/31/22) you buy a Darth Vader costume for $59.99. You save that costume for ~12 years when, on May the 4th (5/4/34) a Star Wars fanatic buys it off of you for $299.00. What is the internal rate of return of this sale?
Q2. It is July 11, 2022 and you are starting your new job at Nike! Nike makes an initial investment of $240,000 into you (providing employee benefits, accessories, etc.) and expects you to bring in $9,600 worth of value every 2 weeks for 200 weeks. You will receive a paycheck from Nike every 2 weeks for $6,400, so their net cost is the difference between your sales and your wage cost. Your last check will be 5/22/2026.
What is Nike's rate of return on you as an employee?
Q3. A new machine is purchased to produce Nike's flagship product, Air Cartwrights, for $372,000. The annual revenue from this machine is calculated to be $80,500, rising 4% every year for 8 years. Expect the maintenance and operation cost to be $3,000 the first year, rising 2% every year, and for there to be a salvage value of $30,000 at the end of the project life. Nike expects a 14% return on this project.
(a) What is the rate of return for this machine?
(b) Will you recommend that Nike move forward with this project?
Q4. Calculate the rate of return for an investment with the following characteristics:
CAPEX Cost $700,000
Project Life 11
Annual Revenue $86,000
OPEX Cost Annual $10,000