What is the npv of the investment of innovation company

Assignment Help Financial Accounting
Reference no: EM132916691

Innovation Company is thinking about marketing a new software product. Upfront costs to market and develop the product are $4,900,000. The product is expected to generate profits of $1,400,000 per year for ten years. The company will have to provide product support expected to cost $99,000 per year in perpetuity. Assume all income and expenses occur at the end of each year.

Problem a. What is the NPV of this investment if the cost of capital is 5.24%?? Should the firm undertake the? project? Repeat the analysis for discount rates of 1.20% and 22.93%?, respectively.

Problem b. How many IRRs does this investment opportunity? have? ?(Hint?: Consider the two alternative discount rates we used in our analysis in part? a.)

Problem c. Can the IRR rule be used to evaluate this? investment? Explain.

Reference no: EM132916691

Questions Cloud

Define cloud accounting : Given the benefits provided by computerized systems, critique whether it is still necessary to learn manual double-entry accounting systems
Calculate the cost of goods sold for the company : A quick ratio of 0.91, an inventory turnover of 7, and a current ratio of 2.1. Calculate the cost of goods sold for the company. Round to 2 decimals.
Calculate the companys days sales in receivables : An accounts receivables balance of 1,500,000. Assuming 85% of sales are on credit, calculate the company's days' sales in receivables.
Calculate the firm net income : Joe Strong Co. has sales of 12,000, total assets of 8,000, an equity multiplier of 2.1, an ROE of 8%. Calculate the firm's net income. Round to 2 decimals.
What is the npv of the investment of innovation company : What is the NPV of this investment if the cost of capital is 5.24%?? Should the firm undertake the? project? Repeat the analysis for discount rates of 1.20%
How much should contribute each month to retirement : How much should you contribute each month to your retirement fund, assuming your contributions start one month after your 25& birthday?
What are Facebook net cash flow under the lease contract : What are Facebook's net cash flow under the lease contract? Facebook is considering two proposals to overhaul its network infrastructure.
Design and conduct a comprehensive strategy review : Demonstrate advanced knowledge of the concept of emergent strategy and Design and conduct a comprehensive strategy review, evaluation, and control
Which linear equation represents the cost : A pizza shop determines it costs $125 per day to be open plus $4 for each pizza made. Which linear equation represents the cost, y, for making x pizzas in a day

Reviews

Write a Review

Financial Accounting Questions & Answers

  Experience with DFDs and system flowcharts

Based on your experience with DFDs and system flowcharts as well as the text material, provide your thoughts on the circumstances under which each type of diagram would be most useful

  Calculate the earnings per share of the company

In addition to the information, assuming also issued further 40,000 ordinary shares on 1 July 2019. Calculate the earnings per share of the company.

  How much could doug deduct from taxes the year

The school served all attendees a dinner worth $50. How much could Doug deduct from his taxes this year for this transaction?

  Describe at least two products or production processes

Describe at least two products or production processes that might use both process and job order costing methods to determine the cost of a finished unit. Please be detailed in your response.

  How to deposit one large lump sum today

How much would you have to deposit if You want to deposit an equal amount at the end of each year and You want to deposit one large lump sum today?

  What is the breakeven number of participants

What is the breakeven number of participants that must attend the seminar if a $200 fee is charged to each attendee?

  Total amount that should be recorder in the land account

In addition, the company also paid $2,800 to clear the land and another $5,000 to tear down the old building. Some of the contents of the old building were sold from $1,400.

  Calculate times interest earned ratio for LaTonya Flop

LaTonya's Flop Shops has no preferred stock outstanding. Use the above information to calculate the times interest earned ratio for LaTonya's Flop Shops, Inc

  How did the allow the company to save money

How did the allow the company to save money. How did the supply chain management software implementation allow John Deere to reduce inventory on hand?

  What kind of decisions will have to take in the company

What kind of decisions you will have to take in the company and give specific examples of the decisions. There are decisions that need to be taken

  Statement of cash flows using the indirect methods

Prepare the cash flows from operating activities section only of the company’s 2013 statement of cash flows using the indirect methods

  Will you receive a gain or loss in this stock position

You bought 1000 WLCON shares a year ago at P11 per share. Today, WLCON stock trades for P15 per share. Will you receive a gain or loss in this stock position

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