Question

In: Finance

A company is planning a four-year project, with an initial cost of $1.67 million. This investment...

A company is planning a four-year project, with an initial cost of $1.67 million. This investment cost is amortized to zero over four years on a straight-line basis. However, the asset could be disposed of for $435,000 in four years. The project requires $198,000 in working capital initially and is fully recoverable after the project is completed. The project generates $1,850,000 in sales and $1,038,000 in costs each year. If the tax rate is 21% and the required return rate is 16.4%, what is NPV?

Solutions

Expert Solution

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

A Company is planning to undertake a project requiring initial investment of $50 million and is...
A Company is planning to undertake a project requiring initial investment of $50 million and is expected to generate $10 million in Year 1, $13 million in Year 2, $16 million in year 3, $19 million in Year 4 and $22 million in Year 5. Calculate the payback value of the project. Calculate the discount payback value of the project (i=12%).
Initial Cash flow investment Project A $5 million $2 million per year for four years Project...
Initial Cash flow investment Project A $5 million $2 million per year for four years Project B $3 million $1 million per year for five years Project C $2 million $1 million per year for four years Project D $3 million $1.5 million per year for three years An investor has a budget of $5 million. He can invest in the projects shown above. If the cost of capital is 6%, what investment or investments should he make? Select one:...
a. You are planning an investment in a project with an initial cost of $ 80,000....
a. You are planning an investment in a project with an initial cost of $ 80,000. That project is expected to produce an NCF of $ 20,000 annually for the next six years. your expected rate of return is 10%. Compute for that project the following: payback period, net present value, internal rate of return, and profitability index. b. A company is considering two independent projects between them. The initial cost for project A is $ 50,000 and for project...
A company is planning to start an investment, which will cost an initial investment of $...
A company is planning to start an investment, which will cost an initial investment of $ 15 million. The management has already forecasted all future cash flows from this project: $4 million each year, for the next 6 years. Then the investment (machinery etc) will be sold for a price of $3 million. Calculate the MIRR, knowing that recovered funds will be reinvested at a rate of 12% annual nominal, compounded annually. For the external financing rate, the company uses...
A company is planning to start an investment, which will cost an initial investment of $...
A company is planning to start an investment, which will cost an initial investment of $ 15 million. The management has already forecasted all future cash flows from this project: $4 million each year, for the next 6 years. Then the investment (machinery etc) will be sold for a price of $3 million. Calculate the MIRR, knowing that recovered funds will be reinvested at a rate of  12% annual nominal, compounded annually.  For the external financing rate, the company uses the MARR....
TB12 corp is considering a project that will cost $20 million initial investment. The company projects...
TB12 corp is considering a project that will cost $20 million initial investment. The company projects to have payoffs of $5 mil, $8 mil, $8 mil, $6 mil, $4 mil in years 1, 2, 3, 4 and 5 respectively. Due to COVID-19, there is a 10% chance that the company can get nothing back from their initial investment. The company current cost of capital is 10% p.a. compounded annually. Answer two questions below: Question 12: What are the two methods...
TB12 corp is considering a project that will cost $20 million initial investment. The company projects...
TB12 corp is considering a project that will cost $20 million initial investment. The company projects to have payoffs of $5 mil, $8 mil, $8 mil, $6 mil, $4 mil in years 1, 2, 3, 4 and 5 respectively. Due to COVID-19, there is a 10% chance that the company can get nothing back from their initial investment. The company current cost of capital is 10% p.a. compounded annually. Answer two questions below: Question 12: What are the two methods...
TB12 corp is considering a project that will cost $20 million initial investment. The company projects...
TB12 corp is considering a project that will cost $20 million initial investment. The company projects to have payoffs of $5 mil, $8 mil, $8 mil, $6 mil, $4 mil in years 1, 2, 3, 4 and 5 respectively. Due to COVID-19, there is a 10% chance that the company can get nothing back from their initial investment. The company current cost of capital is 10% p.a. compounded annually. Answer two questions below: Question 12: What are the two methods...
A firm is planning an investment in a project. The initial investment is 250,000. The project...
A firm is planning an investment in a project. The initial investment is 250,000. The project returns $100,000 cash at the end of one year. At the end of second year the project returns cash of amount $F. These are only cash flows from the project. If the IRR for the project is 10%, what is the amount $F?
Cordia Corporation is planning a 15 year project with an initial investment of $2,500,000. The project...
Cordia Corporation is planning a 15 year project with an initial investment of $2,500,000. The project will have $400,000 cash inflows per year in years 1-5 ; $200,000 cash inflows in years 6-10, and $40,000 cash inflows in years 11-15. a) Determine this project's intemal rate of return. b) If Cordia's opportunity cost of capital is 8%, should they accept or reject this project? c) Explain your reason for your decision in part (b).
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT