What is the irr for project

Assignment Help Finance Basics
Reference no: EM132630486

Your (very profitable) company is considering the installation of a new production system that will cost $150,000. It is estimated that the system will increase revenues by $65,000 annually for Years 1-4, followed by $50,000 annually for Years 5-7. Operating expenses other than depreciation will also increase by $15,000 per year for Years 1-7. The system will be depreciated on a MACRS basis over 5 years to a zero-salvage value. That is, the annual depreciation expense in years 1-6 will be: $30,000, $48,000, $28,500, $18,000, $16,500, and $9,000. The tax rate on ordinary income is 40 percent, and the firm's cost of capital for this project is 10 percent. As you can calculate, the NPV for this project is $27,155.32. What is the IRR for this project?

Reference no: EM132630486

Questions Cloud

What is your responsibility to the employees : What is your responsibility to reduce costs? Utilize the IMA's ethical standards to support your answer. What is your responsibility to the employees
How using principle suppress chaos in social interaction : What evidence is there to support the idea that people organize their perceptions of action in the social world in terms of causes and effects.
Unofficial Actors : Many members of the news media say that they are just a "mirror" of society and that they simply reflect what happens in society.
Determine the current price of bond : Assume that a bond has an annual stated coupon rate of 8 percent (interest is paid semi-annually), a maturity value of $1,000
What is the irr for project : The tax rate on ordinary income is 40 percent, and the firm's cost of capital for this project is 10 percent. As you can calculate
What are the implications for lacking theory of mind : How may a theory of mind help us adapt to the environment around us? Some say that one of our greatest advantages is navigating our social environment.
What sense could be an evolutionary adaptation : What sense could this be an evolutionary adaptation that may have been selected for our survival? Is there anything wrong with people believing
What is the process of financial statements : What is the process of financial statements? Would you want to produce them even if they were not required, say, for entity tax reporting?
What is the receipt by selling : What is cost of buying $2000 one month forward? What is the receipt by selling $1250 one month forward?

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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