Question
In: Finance
The Gamma Company is planning on investing in a new project. This project requires an initial...
The Gamma Company is planning on investing in a new project. This project requires an initial investment into a new machinery of $420,000. The Gamma Company expects cash inflows from this project to be as follows: $200,000 in year 1, $225,000 in year 2, $275,000 in year 3, and $200,000 in year 4 of the project. The appropriate discount rate for this project is estimated at 16%. What is the IRR of this project?
Group of answer choices
31.2%
26.7%
38.4%
28.6%
35.7%
24.8%
Solutions
jeff jeffy answered 2 years agoRelated Solutions
The Gamma Company is planning on investing in a new project. This project requires an initial...
The Gamma Company is planning on investing in a new project.
This project requires an initial investment into a new machinery of
$420,000. The Gamma Company expects cash inflows from this project
to be as follows: $200,000 in year 1, $225,000 in year 2, $275,000
in year 3, and $200,000 in year 4 of the project. If the
appropriate discount rate for this project is 16% then the NPV of
the project is closest to _____________________.
Group of answer choices...
You are investing in a project that requires an initial investment of $500,000. The project will...
You are investing in a project that requires an initial
investment of $500,000. The project will last for 10 years with the
following additional cash flows (CF) at the end of each year:
If the discount rate is 10%, calculate the payback periods in
Excel for both the methods below;
Years
1
2
3
4
5
6
7
8
9
10
CF
-500,000
80,000
100,000
100,000
120,000
140,000
150,000
150,000
150,000
150,000
a) Payback Method [10]
b) Discounted Payback Method...
The Sisyphean Company is planning on investing in a new project. This will involve the purchase...
The Sisyphean Company is planning on investing in a new project.
This will involve the purchase of some new machinery costing
$450,000. The Sisyphean Company expects cash inflows from this
project as detailed below:
Year One
Year Two
Year Three
Year Four
$200,000
$225,000
$275,000
$200,000
The appropriate discount rate for this project is 16%.
The NPV for this project is closest to:
The Sisyphean Company is planning on investing in a new project. This will involve the purchase...
The Sisyphean Company is planning on investing in a new project.
This will involve the purchase of some new machinery costing $ 350
comma 000. The Sisyphean Company expects cash inflows from this
project as detailed below: Year 1 Year 2 Year 3 Year 4 $ 150 comma
850 $ 150 comma 850 $ 150 comma 850 $ 150 comma 850 The appropriate
discount rate for this project is 15%. The internal rate of
return (IRR) for this project is...
The Elkton Company is considering a new project that requires an initial investment of $24,000,000 to...
The Elkton Company is considering a new project that requires an
initial investment of $24,000,000 to build a new plant and purchase
equipment. The investment will be depreciated using the straight
line method over 10 years. The new plant will be
built on some of the company's land which has a current, after-tax
market value of $5,000,000. The company will produce
widgets at a cost of $130 each and will sell them for $420 each.
Annual fixed costs are $500,000. Sales (in units)...
The Elkton Company is considering a new project that requires an initial investment of $24,000,000 to...
The Elkton Company is considering a new project that requires an
initial investment of $24,000,000 to build a new plant and purchase
equipment. The investment will be depreciated using the straight
line method over 10 years. The new plant will be
built on some of the company's land which has a current, after-tax
market value of $5,000,000. The company will produce
widgets at a cost of $130 each and will sell them for $420 each.
Annual fixed costs are $500,000. Sales (in units)...
1) A company invests in a new project that requires an initial capital outlay of $852790....
1) A company invests in a new project that requires an initial
capital outlay of $852790. The project will generate annual net
cash flows of $145612 over a period of 8 years. The after-tax cost
of capital is 9%. In addition, a working capital outlay of $94620
will be required. This working capital outlay will be recovered at
the end of the project’s life.
What is the net present value of the project?
Select one:
a. $-141474
b. $-93987
c....
A company is considering investing in a project that requires the company to take on risks...
A company is considering investing in a project that requires
the company to take on risks outside of the company's current
scope. As a result, which of the following things will happen?
Select one:
a. The company's stock value would drop unless the project
increase the company's expected returns.
b. The company does not have to recalculate its WACC to evaluate
the project.
c. All of these things.
d. The project would decrease the company's cost of equity.
Lamar Advertising is considering investing in a project that requires an after-tax initial investment of $128...
Lamar Advertising is considering investing in a project that
requires an after-tax initial investment of $128 million and is
expected to produce after-tax cash inflows of $29 million in
advertising revenue for each of the next five years. The firm's
cost of capital is 11%. Based on this information, the NPV of the
project is _________ million and the firm should _________ the
project
$12.2; accept
-$12.2; reject
$20.8; accept
-$20.8; reject
Your company is considering a new 3-year project that requires an initial investment in equipment of...
Your company is considering a new 3-year project that requires
an initial investment in equipment of $3 million. Prior to this,
you had engaged a consultant to study the feasibility of the new
project and after an extensive market survey, the consultant
confirmed your belief that the project would be viable. Your
company is charged $100,000 for the feasibility study.
The equipment will be depreciated straight line to zero over the 3
years of its useful life. In addition, you...
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