Question

In: Finance

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.


Related Solutions

What is the IRR of a project with the following characteristics? Initial investment is $2,000,000 Initial...
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...
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 $...
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...
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...
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...
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...
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...
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...
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...
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...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT