Question
In: Finance
Wayne Company is considering a long-term investment project called ZIP. ZIP will require an investment of...
Wayne Company is considering a long-term investment project called
ZIP. ZIP will require an investment of $120,000.
It will have a useful life of
4
years and no salvage value. Annual cash inflows would increase by
$80,000,
and annual cash outflows would increase by $40,000.
The company’s required rate of return is
12%.
Calculate the internal rate of return on this project. (Round
answers to 0 decimal places, e.g. 15%.)
1. Internal rate of return on this project is between % and
%.
2. Determine whether this project should be accepted?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Marigold Company is considering a long-term investment project called ZIP. ZIP will require an investment of...
Marigold Company is considering a long-term investment project
called ZIP. ZIP will require an investment of $120,900. It will
have a useful life of 4 years and no salvage value. Annual cash
inflows would increase by $83,600, and annual cash outflows would
increase by $43,300. The company’s required rate of return is 12%.
Click here to view PV table.
Calculate the internal rate of return on this project.
(Round answers to 0 decimal places,
e.g. 15%.)
Internal rate of return...
Wallowa Company is considering a long term investment project called ZIP. ZIP will require an investment...
Wallowa Company is considering a long term investment project
called ZIP. ZIP will require an investment of $120,000. it will
have a useful life of 4 years and no residual value. Wallowa uses
the straight-line method to compute depreciation expense. Annual
cash inflows would increase by $60,000, and annual cash outflows
would increase by $20,000. The company's required rate of return is
12%
SHOW YOUR WORK
1. Compute the cash payback period on this project.
2. Calculate the net present...
Sierra Company is considering a long-term investment project called ZIP. ZIP will require an investment of...
Sierra Company is considering a long-term investment project
called ZIP. ZIP will require an investment of $128,000. It will
have a useful life of four years and no salvage value. Annual cash
inflows would increase by $79,100, and annual cash outflows would
increase by $39,200. The company's required rate of return is 10%.
Click here to view PV table.
(a)
Calculate the net present value on this project. (If
the answer is negative, use either a negative sign preceding the...
Pronghorn Company is considering a long-term investment project called ZIP. ZIP will require an investment of...
Pronghorn Company is considering a long-term investment project
called ZIP. ZIP will require an investment of $119,410. It will
have a useful life of 4 years and no salvage value. Annual cash
inflows would increase by $80,800, and annual cash outflows would
increase by $40,900. The company’s required rate of return is
12%.
(a)- Calculate the net present value on this
project.
(b)- Should the project be accepted?
A company is considering a long term investment project. It will require an investment of $128,300....
A
company is considering a long term investment project. It will
require an investment of $128,300. Useful life is 4 years. No
salvage value. Annual cash inflows would increase $80,300 and
annual cash outflows would increase $40,400. The company's required
rate of return is 9 percent. Calculate the net present value of
this project
A company is considering investing in a project that will require an initial investment of $535k,...
A company is considering investing in a project that will
require an initial investment of $535k, a dismantling cost after 10
years of $1.6M, and will bring in a positive cash flow at the end
of each of the 11 years of $210k. The company has an expected
internal return rate of 12%. Show using the Equivalent Rate of
Return (ERR) method whether the company should make the
investment.
Calculate the return for investing for ZIP pay company both short term and long term and...
Calculate the return for investing for ZIP pay company both
short term and long term and identify the main causes of its
volatility in return over the corresponding holding period. The
discussion of volatility should consider economic-wide and
firm-specific factors.
Cardinal Company is considering a project that would require a $2,985,000 investment in equipment with a...
Cardinal Company is considering a project that would require a
$2,985,000 investment in equipment with a useful life of five
years. At the end of five years, the project would terminate and
the equipment would be sold for its salvage value of $400,000. The
company’s discount rate is 16%. The project would provide net
operating income each year as follows:
Sales
$
2,737,000
Variable expenses
1,001,000
Contribution margin
1,736,000
Fixed expenses:
Advertising, salaries, and other
fixed...
Cardinal Company is considering a project that would require a $2,985,000 investment in equipment with a...
Cardinal Company is considering a project that would require a
$2,985,000 investment in equipment with a useful life of five
years. At the end of five years, the project would terminate and
the equipment would be sold for its salvage value of $400,000. The
company’s discount rate is 16%. The project would provide net
operating income each year as follows:
Sales
$
2,737,000
Variable expenses
1,001,000
Contribution margin
1,736,000
Fixed expenses:
Advertising, salaries, and other
fixed...
Cardinal Company is considering a project that would require a $2,810,000 investment in equipment with a...
Cardinal Company is considering a project that would require a
$2,810,000 investment in equipment with a useful life of five
years. At the end of five years, the project would terminate and
the equipment would be sold for its salvage value of $500,000. The
company’s discount rate is 16%. The project would provide net
operating income each year as follows:
Sales
$
2,847,000
Variable expenses
1,121,000
Contribution margin
1,726,000
Fixed expenses:
Advertising, salaries, and other
fixed...
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