Calculate the net present value, Financial Management

Assignment Help:

NPV and Other Criteria

Waddington International Inc. has $20 million to invest. It is considering whether to build a new factory in Western Canada. The land and the building will cost $15 million payable today. The machines and equipments will cost another $5 million but payable at the end of the first year. It is expected that the factory will generate cash flow of $3 million per year for the next 15 years. The company's cost of capital is 10%.  

(a) Calculate the Net Present Value (NPV) and the internal rate of return (IRR) of the Western Canada project.

(b) Calculate the NPV and PI of each project.

(c) Which project or projects should the company choose and why?


Related Discussions:- Calculate the net present value

Long term investement and financial decisions, you would like to purchase a...

you would like to purchase a new car in 3 years.The current value of the vehicle you would like to purchseis 100000.The manufacturer of the vehicle has advised you,that the cost of

Define the term- cash purchases, Define the term- Cash purchases     Shar...

Define the term- Cash purchases     Shareholders of the target company are bought out completely and have no further stake in business. This is good if predator shareholders want

Event-driven strategies-investment strategy of hedge funds, Event-Driven St...

Event-Driven Strategies : These strategies are solely focus on events of corporate life cycle for investing. They involve significant opportunities created by corporate events such

Explain the relationship between growth and inequality, While poverty reduc...

While poverty reduction has become the main goal of development efforts, there is an on-going and sometimes heated debate about the elements that would be at the center of any sens

Swap market, Swap Market: The fall of Bretton Wood system in early 1970...

Swap Market: The fall of Bretton Wood system in early 1970s weakened of the pound. It was imperative to stop the downward slide of the pound. In order to control the flow of fo

Waht are additional information required in chromex plc, Additional informa...

Additional information required Specification of a time scale for the evaluation. Predict cash flow details year by year for period specified in the time scale. An approxima

Budgeting and budgetary control, Budgeting and Budgetary Control: The n...

Budgeting and Budgetary Control: The next element of financial management is budgeting and budgetary control.  Budgeting is an integral part of the management accounting proces

Start-up financing, Start-Up Financing Capital provided to companies wh...

Start-Up Financing Capital provided to companies which have been in operation for less than one year to facilitate all phases of bringing their product to market.

Write down budget constraint - budget line, You have $20 to spend on high q...

You have $20 to spend on high quality pens and low quality pens. High quality pens cost $5 each and low quality pens cost $2 each.    (a) Suppose that you will spend your entire

Strategies of hedge funds, Strategies of Hedge Funds: Hedge funds use ...

Strategies of Hedge Funds: Hedge funds use a range of different strategies, and each fund manager can argue that he or she is unique and could not be compared to other manager

Write Your Message!

Captcha
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