Deep Waters, Inc. is using the internal rate of return (IRR) when evaluating projects. Find the...

Deep Waters, Inc. is using the internal rate of return (IRR) when evaluating projects. Find the IRR for the company's project. The initial outlay for the project is $468,900. The project will produce the following after-tax inflows of

Year 1: 176,300

Year 2: 100,000

Year 3: 128,300

Year 4: 123,700

Round the answer to two decimal places in percentage form.

Solutions

Expert Solution

Particulars	Year	Cash flows	PVF @ 5%	PV @ 5%	PVF @ 8%	PV @8%
Cash outflow	0	(468,900)	1.00	(468,900)	1.00	(468,900)
Cash Inflow	1	176,300	0.95	167,905	0.93	163,241
Cash Inflow	2	100,000	0.91	90,703	0.86	85,734
Cash Inflow	3	128,300	0.86	110,830	0.79	101,849
Cash Inflow	4	123,700	0.82	101,768	0.74	90,923
Net Present Value		59,400		2,306		(27,154)

IRR = 5.02%

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Deep Waters, Inc. is using the internal rate of return (IRR) when evaluating projects. Find the...

Deep Waters, Inc. is using the internal rate of return (IRR) when evaluating projects. Find the IRR for the company’s project. The initial outlay for the project is $397,200. The project will produce the following after-tax cash inflows of Round two decimal points Year 1: 144,400 Year 2: 89,500 Year 3: 189,600 Year 4: 172,000

Tall Trees, Inc. is using the modified internal rate of return (MIRR) when evaluating projects. The...

Tall Trees, Inc. is using the modified internal rate of return (MIRR) when evaluating projects. The company is able to reinvest cash flows received from the project at an annual rate of 12.04 percent. What is the MIRR of a project if the initial costs are $1,680,000 and the project life is estimated as 7 years? The project will produce the same after-tax cash inflows of 474,700 per year at the end of the year. Round the answer to two...

Tall Trees, Inc. is using the modified internal rate of return (MIRR) when evaluating projects. The...

Tall Trees, Inc. is using the modified internal rate of return (MIRR) when evaluating projects. The company is able to reinvest cash flows received from the project at an annual rate of 13.42 percent. What is the MIRR of a project if the initial costs are $1,476,100 and the project life is estimated at 9 years? The project will produce the same after-tax cash inflows of $627,700 per year at the end of the year. Round the answer to two...

Tall Trees, Inc. is using the modified internal rate of return (MIRR) when evaluating projects. The...

Tall Trees, Inc. is using the modified internal rate of return (MIRR) when evaluating projects. The company is able to reinvest cash flows received from the project at an annual rate of 12.40 percent. What is the MIRR of a project if the initial costs are $1,386,400 and the project life is estimated as 9 years? The project will produce the same after-tax cash inflows of 476,200 per year at the end of the year.

1. In terms of evaluating mutually exclusive projects, the Internal Rate of Return (IRR) method may...

1. In terms of evaluating mutually exclusive projects, the Internal Rate of Return (IRR) method may mistakenly favor investment proposals with: a: Short useful lives. b: Long useful lives. c: Moderate cash flow returns d: Large residual values e: Large initial investment. 2. When the internal rate of return (IRR) method and the net present value (NPV) method do not yield the same recommendation for the same investment project, the projectt-selection decision should normally be based on: a: IRR, because...

Billabong Tech uses the internal rate of return (IRR) to select projects. Calculate the IRR for...

Billabong Tech uses the internal rate of return (IRR) to select projects. Calculate the IRR for each of the following projects and recommend the best project based on this measure. Project T-Shirt requires an initial investment of $12,500 and generates cash inflows of $7,500 per year for 3 years. Project Board Shorts requires an initial investment of $18,333 and produces cash inflows of $10,000 per year for 4 years

Billabong Tech uses the internal rate of return (IRR) to select projects. Calculate the IRR for...

Billabong Tech uses the internal rate of return (IRR) to select projects. Calculate the IRR for each of the following projects and recommend the best project based on this measure. Project T-Shirt requires an initial investment of $16, 000 and generates cash inflows of $6,000 per year for 6 years. Project Board Shorts requires an initial investment of $30,667 and produces cash inflows of $11,000 per year for 7 years

4. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound...

4. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash flows. Consider the case of Blue Pencil Publishing: Consider the following case: Blue Pencil Publishing is evaluating a proposed capital budgeting project (project Sigma) that will requ ire an initial investment of $800,000. Blue Pencil Publishing has been basing capital budgeting decisions on a project's NPV; however, its...

4. Internal rate of return (IRR) Aa Aa The internal rate of return (IRR) refers to...

4. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash flows. Consider this case: Consider the following case: Fuzzy Badger Transport Company is evaluating a proposed capital budgeting project (project Delta) that will require an initial investment of $1,500,000 Fuzzy Badger Transport Company has been basing capital budgeting decisions on a project's NPV; however, its new CFO wants to start using the...

Internal rate of return (IRR) Ziff Corp. is evaluating a proposed capital budgeting project that will...

Internal rate of return (IRR) Ziff Corp. is evaluating a proposed capital budgeting project that will require an initial investment of $1,550,000. The project is expected to generate the following net cash flows: Year Net Cash Flow 1 $350,000 2 $475,000 3 $400,000 4 $475,000 Ziff Corp. hasbeen basing capital budgeting decisions on a project’s NPV; however, its new CFO wants to start using the internal rate of return (IRR) method for capital budgeting decisions. The CFO says that the...

Subjects