User Account

All Pages

What is the irr of the project

Assignment Help Finance Basics
Reference no: EM131473460

John James Rolly is the CFO of SD Yachts Inc., a manufacturer of boat fenders for luxury yachts. Rolly is considering the purchase of a 2 to injection mold, which will allow the company to mold boat fenders. The equipment cost $250,000. The project is expected to produce after tax cash flows of $60,000 for the first year, and increase by $10,000 annually; the after-tax cash flow in year 5 will reach $100,000. Liquidation of the equipment will net the company $10,000 in cash at the end of 5 years.

a) Assume that the required return is 15%. Is the project profitable?

b) Assume that the required return is 19%. Is the project profitable?

c) What is the IRR of the project?

d) How will your answer change to part (a) if the company does not net anything on the liquidation of the equipment?

Reference no: EM131473460

Questions Cloud

Sexual harassment in workplace : An annotated bibliography of at least five references . At least one of your articles must be on an empirical study published in a academic journal.
What is the yield to maturity : What is the yield to maturity? What is the yield to call? If you bought the bond, which would return would you actually earn? Explain your reasoning.
Can color be an inherently distinctive mark : OPINION: JUSTICE BREYER The question in this case is whether the Trademark Act of 1946 (Lanham Act) permits the registration of a trademark that consists.
Examine the evolution of key african american movements : Deploy historical analysis of text, image, audio and visual media, and other primary artifacts to frame significant developments in African American history .
What is the irr of the project : Assume that the required return is 19%. Is the project profitable? What is the IRR of the project?
Shares of common stock outstanding : A had total earnings last year of $5,000,000, but expects total earnings to drop to $4,750,000 this year due to a slump in the beer industry.
Review the case of quality king distributors inc : FACTS L'Anza Research International, a U.S. manufacturer of hair products, limited its domestic sales to distributors who agreed to sell only to authorized.
Review the case of tiffany nj inc v ebay inc : FACTS Tiffany, "the famous jeweler with the coveted blue boxes," sued eBay, alleging that hundreds of thousands of counterfeit Tiffany silver jewelry items.
How should the standards be changed : If not, how should the standards be changed? Do your think more (or less) companies will engage in this transaction in the future? Why?

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculate the value of security

Calculate the value of security and Value the financial instrument below using excel functions

  Here and gone inc has sales of 199 million total assets of

here and gone inc. has sales of 19.9 million total assets of 14.9 million and total debt of 5.7 million. assume the

  How would you measure the different forms of debt?

How would you measure the different forms of debt?

  Decision making question on investment

Explain what is important is being able to extrapolate all that information, and there is a lot of data out there, into a usable form for you to make wise investment decisions.

  Analyze mark budget as a financial planning

Analyze Mark's budget as a financial planning tool for making decisions in the following situations. In each case, how will other financial planning tools affect Mark's decisions?

  Calculate the terminal value using the multiple method

Free cash flow in year 5 is expected to be $145 million. MiCasa, S.A. is expected to be sold at its terminal value. Calculate the terminal value using the multiple method.

  Preferred stockholders have a priority over bondholders in

1. which of the following statements is correct?a. the preferred stock of a given firm is generally less risky to

  Continental bank of illinois was bailed out before a banking

1.Continental Bank of Illinois was bailed out before a banking crisis occurred. Regulators thought that Continental was too big to fail. true or false ? why ?2. Paul Volcker argued that the failure of Continental Illinois Bank would have caused other..

  Calculate the required return on marys portfolio

calculate the required return on Mary's portfolio.

  Calculate the variance on a portfolio

Calculate the variance on a portfolio that is made up of equal investments in Dell's and Oracle's stock.

  If the price level recently fell by 5 in canada whilenbsp

1. the current exchange rate between canada and britain is 0.5268 per canadian dollar. the three month forward rate

  Which offer should you accept and why

Bank A offers to pay you lump sum of $20,000 after 5 years, if you deposit $9,500 with them today. Bank B, on the other hand, says that they will pay you a lump sum of $22,000 after 5 years, if you deposit $10,700 with them today. Which offer should ..

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd