A new hog investment requires an initial outlay of $130,000 and is expected to increase operating...

A new hog investment requires an initial outlay of $130,000 and is expected to increase operating receipts by 87,000 but will also increase operating expenses by 23,000. The investment will be depreciated over 15 years and will have a $0 salvage value. The marginal tax rate is 30%. The investment will be analyzed over 7 years and the terminal value of the hog investment after 7 years will be $45,000. The pre-tax discount rate is 13.5%. What is the NPV

Based on the previous question, what is the IRR?

Based on your previous answers, would you invest in this project? Why or why not?

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jeff jeffy answered 2 weeks ago

1. A new hog investment requires an initial outlay of $130,000 and is expected to increase...

1. A new hog investment requires an initial outlay of $130,000 and is expected to increase operating receipts by 87,000 but will also increase operating expenses by 23,000. The investment will be depreciated over 15 years and will have a $0 salvage value. The marginal tax rate is 30%. The investment will be analyzed over 7 years and the terminal value of the hog investment after 7 years will be $45,000. The pre-tax discount rate is 13.5%. What is the...

An investment project requires an initial outlay of $100,000, and is expected to generate annual cash...

An investment project requires an initial outlay of $100,000, and is expected to generate annual cash inflows of $28,000 for the next 5 years. The cost of capital is 12 percent. Determine the internal rate of return for the project (to the nearest tenth of one percent). a. 12.0% b. 12.6% c. 3.6% d. 12.4%

Caribbean, Inc. is considering a new investment opportunity. The project requires an initial outlay of $525,000...

Caribbean, Inc. is considering a new investment opportunity. The project requires an initial outlay of $525,000 and is expected to bring in a $75,000 cash inflow at the end of the first year. After the first year, annual cash flows from the project are forecasted to grow at a constant rate of 5% until the end of the fifth year and to remain constant forever thereafter. The company currently has a target debt-to-equity ratio of .40, but the industry that...

A new computer system will require an initial outlay of $20,000, but it will increase the...

A new computer system will require an initial outlay of $20,000, but it will increase the firm’s cash flows by $4,300 a year for each of the next 8 years. a. Calculate the NPV and decide if the system is worth installing if the required rate of return is 9%. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) b. Calculate the NPV and decide if the system...

A new computer system will require an initial outlay of $24,500, but it will increase the...

A new computer system will require an initial outlay of $24,500, but it will increase the firm's cash flows by $4,900 a year for each of the next 8 years. Calculate the NPV and decide if the system is worth installing if the required rate of return is 9%. Calculate the NPV and decide if the system is worth installing if the required rate of return is 14%. How high can the discount rate be before you would reject the...

A new computer system will require an initial outlay of $17,500, but it will increase the...

A new computer system will require an initial outlay of $17,500, but it will increase the firm’s cash flows by $3,500 a year for each of the next 8 years. a. Calculate the NPV and decide if the system is worth installing if the required rate of return is 9%. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) b. Calculate the NPV and decide if the system...

A new computer system will require an initial outlay of $24,000, but it will increase the...

A new computer system will require an initial outlay of $24,000, but it will increase the firm’s cash flows by $4,800 a year for each of the next 6 years. a. Calculate the NPV and decide if the system is worth installing if the required rate of return is 8%. What if it is 13%? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) Rate of Return NPV...

A new computer system will require an initial outlay of $21,500, but it will increase the...

A new computer system will require an initial outlay of $21,500, but it will increase the firm’s cash flows by $4,600 a year for each of the next 8 years. a. Calculate the NPV and decide if the system is worth installing if the required rate of return is 9%. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) b. Calculate the NPV and decide if the system...

A new computer system will require an initial outlay of $20,250, but it will increase the...

A new computer system will require an initial outlay of $20,250, but it will increase the firm’s cash flows by $4,500 a year for each of the next 6 years. A) Calculate the NPV and decide if the system is worth installing if the required rate of return is 8%. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) B) Calculate the NPV and decide if the system...

A new computer system will require an initial outlay of $18,750, but it will increase the...

A new computer system will require an initial outlay of $18,750, but it will increase the firm’s cash flows by $4,200 a year for each of the next 6 years. a. Calculate the NPV and decide if the system is worth installing if the required rate of return is 8%. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) b. Calculate the NPV and decide if the system...

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