What is the project mirr and npv

Assignment Help Finance Basics
Reference no: EM132411082

Graziano Corporation (GC) is considering a project to purchase a new equipment. The equipment would be depreciated by the straight-line method over its 3-year life and would have a zero-salvage value. The project requires investment of $6,000 today on net working capital. Revenues and other operating costs are expected to be constant over the project's 3-year life. However, this project would compete with other company's products and would reduce their pre-tax annual cash flows of $5,000 per year.

The investment on project costs $76,000 today plus $4,000 installation cost. The project generates sales revenues of $67,500 each year for 3 years. The annual operating costs of the project is $25,000, excluding depreciation. GC has weighted average cost of capital 11.00% and its tax rate is 35 percent.

The company can sell the equipment at the end of third year to generate $10,000 after tax cash flow. What is the project's MIRR and NPV?

Reference no: EM132411082

Questions Cloud

Define situation where you have had to use descriptive stats : Debate the purpose of descriptive statistics as a form of summary information and why it is useful in some situations to describe populations. Describe a situat
What is the cost of preferred stock : Green Water System has 100,000 shares of preferred stock pay a $2.5 annual dividend per share, and sell for $40 per share. What is the cost of preferred stock?
Calculate the yield to maturity of the bond : The interest payments are made annually. Calculate the yield to maturity of the bond (in euros) if the price of the bond is 106 euros.
Demonstrate reasoning about efficiency of algorithms : Evaluate the efficiency and effectiveness of data structures and algorithms and Demonstrate reasoning about efficiency of algorithms
What is the project mirr and npv : The company can sell the equipment at the end of third year to generate $10,000 after tax cash flow. What is the project's MIRR and NPV?
Democratic presidential primary debate : Based on the Democratic presidential primary debate that took place last week
Demonstrate how the course research has connected : At the University, it is a priority that students are provided with strong educational programs and courses that allow them to be servant-leaders in their.
Potential investor decision to invest in verizon : Provide three (3) specific examples of how the three (3) items you selected could influence a potential investor's decision to invest in Verizon.
What are the tax consequences of the recap : 1. What are the tax consequences of the recap? 2. Based only on the tax effects and the Valuation Principle, what will be the total value of the firm

Reviews

Write a Review

Finance Basics Questions & Answers

  Deplete the fund with the last withdrawal

If Mike deposits $20,000 into an account that pays 10% interest compounded annually. If he withdraws 10 equal amounts from the account, with the first

  What options and procedure would you consider acceptable

When people get injured and subsequently hospitalized. What options and procedure would you consider acceptable for collection of bad debt?

  Formula for pv of future balloon payment

When Federal Reserve notifies banks that they should hold fifteen cents for every dollar that is deposited, it is controlling the money supply by using which of following tools?

  Consider a discount bond with a face value

Consider a discount bond with a face value of $500 and a maturity date of January 1, 2019.a.  Suppose that on January 1, 2016, when the market's (nominal) yield to maturity is 6.0 percent per year, you buy the bond at price P1. What will P1 be?

  What is the project mirr

Celaya Industries is considering a project that has the following cash flow and WACC data. What is the project's MIRR?

  Discuss the relationships between operating and combined

Discuss the relationships between operating, financial and combined leverage?

  Responsible for controlling the weight of a box of cereal

As a quality analyst you are also responsible for controlling the weight of a box of cereal. The Operations Manager asks you to identify the ways in which statistical quality control methods can be applied to the weights of the boxes. Provide your..

  Case of counterparty credit risk in a gauss

In a manner analogous to the case of counterparty credit risk in a Gauss/Markov HJM model covered in the spreadsheet discussed in class, calculate the EFV, EE and PFE for this trade.

  What are the portfolio weights for a portfolio

What are the portfolio weights for a portfolio that has 132 shares of Stock A that sell for $42 per share and 112 shares of Stock B that sell for $32 per share? (Round your answers to 4 decimal places. (e.g., 32.1616))

  What would be the stock price in five years

If this growth rate continues, what would be the stock price in five years if the P/E ratio remained unchanged? What would the price be if the P/E ratio increased to 25 in five years?(Round your answers to 2 decimal places.)

  Calculate the yield to maturity

A 20-year, 10% coupon bond is currently quoted at $850. Calculate the following: Yield to call, if the bond is called 10 years later at a call price equal.

  How would you employ the drum buffer rope thinking

You have run a capacity resource profile on your shop. Products have been routed sequentially through resources A, B, C, and D. The capacity resource profile tells you that resource A is scheduled at 95% of capacity, resource B at 80% of capacity, re..

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