what is the IRR for the following project if its
initial after tax cost is $5000000...
what is the IRR for the following project if its
initial after tax cost is $5000000 and it is expected to provide
after tax operating cash inflows of $1800000 in yr 1, $1750000 in
yr 2, $1680000 in yr 3 and $1300000 in yr 4?
Solutions
Expert Solution
Solution :
The IRR of the project = 12.2410 %
= 12.24 % ( when rounded off to two decimal places
)
Please find the attached screenshot of the excel sheet
containing the detailed calculation for the solution.
What is the IRR of a project with the following characteristics?
Initial investment is $2,000,000 Initial investment is depreciated
to $0 book value via straight-line over its 12 year life Project is
expected to generate incremental sales of 1,900,000 per year, and
incremental expenses of 1,400,000 per year There are no NWC or
salvage cash flows The firm faces a 28% tax rate
1.
a. Calculate the IRR for the following project if its cost was
$5,000 and the annual expenditures and costs were:
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
2,000
2,000
2,000
2,000
-1,000
-1,000
b. Assume a firm's WACC is 10 percent. Calculate the NPV for the
following project if its cost was $5,000 and the annual
expenditures and costs were:
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
2,000
2,000...
1 A project has an initial cost of $ 320,000, expected after-tax
cash inflows of $ 75,000 per year for 8 years, a net salvage value
of $ 30,000, and a cost of capital of 11%.
a) What is the project's net present value?
b) What is the project's profitability index? c) What is the
project's internal rate of return?
d) What is the project's modified internal rate of return
(assume the investment rate to be equal to the cost...
1. Me Online, Inc. is considering a project that has an
initial after-tax outlay or after-tax cost of $220,000. The
respective future cash inflows from its four-year project for years
1 through 4 are: $50,000, $60,000, $70,000 and $80,000. Sportswear
Online uses the net present value method and has a discount rate of
11%. Will Sportswear Online accept the project?
a. Me Online rejects the project because the NPV is about
-$22,375.73
b. Me Online accepts the project because the...
Tamarisk Inc. now has the following two projects available:
Project
Initial
CF
After-tax
CF1
After-tax
CF2
After-tax
CF3
1
-11,119
5,050
5,825
9,100
2
-3,104
3,550
2,950
Assume that RF = 4.6%, market risk premium = 10.1%,
and beta = 1.3. Use the EANPV approach to determine which
project(s) Tamarisk Inc. should choose if they are mutually
exclusive. (Round cost of capital to 2 decimal places,
e.g.17.35% and the final answers to 0 decimal places, e.g.
2,513.)
PMT1
$
...
Calculate the IRR for the following project:
a. An initial outflow of $15,220 followed by inflows of $5,000,
$6,000, and $6,500
b. An initial outflow of $47,104 followed by inflows of $16,000,
$17,000, and $18,000.
Problem #4
Calculate NPV, Payback, Discounted Payback, IRR and Modified IRR
for the following project
Initial Investment: -100,000
Annual project cash flow 22,000 for 6 years
Cost of capital is 6%
caclulate the NPV for the project that has an initial investment
of $20,000 with expected after-tax operating cash flows of $125,000
per year for each of the next 3 years. However, in preparation for
its termination at the end of year 3, an additional investment of
$350,000 must be made at the end of Year 2. What is the NPV? the
cost of capital is 12%. Please show all calculations in
excel!
IRR
A project has an initial cost of $55,000, expected net cash
inflows of $11,000 per year for 10 years, and a cost of capital of
14%. What is the project's IRR? Round your answer to two decimal
places.
FINA Inc. considers a project with the following information:
Initial Outlay: 1,500 After-tax cash flows: Year 1: -$100 Year 2:
$1000 Year 3: $700 FINA’s assets are $500 million, financed through
bank loans, bonds, preferred stocks, and common stocks. The amounts
are as follows: Bank loans: $ 100 million borrowed at 10% Bonds:
$180 million, paying 9% coupon with quarterly payments, and
maturity of 5 years. FINA sold its $1,000 par-value bonds for
$1,070 and had to incur $20 flotation...