Question

The company has a new project of importing materials for The manufacturing of nondisposable respirators that can be washed and reused. The cost of the machines in china is 82000$.
Get the total cost of the machine to reach the facility where you are willing to run operations in Beirut city knowing that all imports can be packed in one 40 feets container and it is shipped from guanzhu.
Assume you need to get the facility ready including rent cost for the 5 years life of the project and the required installations are 50000$.
The required total amount to get the project ready is to be calculated then you have to consider a loan of 150000$ from a bank at 8% annually and that the beta of your project is 1.2. The risk-free rate of return in Beirut is 5% and investors demand 13% on their investments.
Calculate the wave of the project.
tax rate of 17.5%
Take your decision considering the following:
IRR 12%
IRR 8%
IRR 10%
what is the minimum IRR you should accept the project if it exists?

N.B: Concerning shipping expenses, cost of shipping and customs etc. they should be figured out

Step by step method. 3-4 pages as a project. how did we calculate using the formulas?

Answer 1

Total Investment $82000 Machinery cost

Rent & IUnstallation $50000 for 5 year period, PV of $50000 is $39176.3

PV of Total Investment = $82000+ $39176.3= $121176.3

Cash Flow Calculated By Investor demand rate 13%.

Year	Cash Flow ($)
0	-1,21,176.31
1	15,752.57
2	17,800.75
3	20,114.85
4	22,729.78
5	25,684.66
6	29,023.66

The Wave of Project is 6 Years means (After 6 years Investor will be positive cash flow by $9929) for 13% return.

When IRR is 12% then Investor will loose $3151.

when IRR is 8% then Investor will loose $50061
When IRR is 10% the Investor will loose $27681

The Minimum 13% IRR Should accept to exist this project.

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