A project requires an initial investment of $28.16 million to buy new equipment, and will provide after-tax cash flows of $11 million per year for 4 years. What is the project's internal rate of return?
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A project requires an initial investment of $28.16 million to buy new equipment, and will provide after-tax cash flows of $11 million per year for 4 years.
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- An investment of P 270,000 can be made in a project that will produce a uniform annual revenue of P 185,400 for 5 yrs and then have a salvage value of 10% of the investment. Out of pocket costs for operation and maintenance will be P 81,000 per year. Taxes and insurance will be 4% of the first cost per year. The company expects capital to earn not less than 25% before income taxes. Is this a desirable investment?A company would like to invest on a project. The rate the company uses to justify their investments, i.e. the MARR is 25% per year (compounded yearly). Their estimations about the projects are as follows: Initial Cost: ($300,000)The Study Period: 15 yearsSalvage (Market) Value of the Project: 20% of the initial cost 1-) What is the capital recovery cost, CR? 2-) Operating costs in the first year are estimated to be ($7,500) and these operating costs are estimated to increase by 5% per year. Construct cash flow table and determine the minimum amount of annual revenue ($ per year?) that makes this investment an attractive option for the company? (i.e. what is Equivalent UNIFORM (Annual) Cost, EU(A)C?) 3-) Benefits in in the first year are estimated to be $30,000 and these benefits are estimated to increase by 13% per year. Construct cash flow table and determine the net present value/worth of the project, NPW. 4-) What is the simple payback period? 5-) Determine IRR of…A start up business is considering two types of equipment - data are as follows: ΤΥΡE Α TYPE B First Cost P200,000.00 P300,000.00 Annual operating cost 32,000.00 24,000.00 Annual labor cost 50,000.00 32,000.00 Insurance and property taxes 3% 3% Payroll taxes I 4% 4% Estimated life 10 10 The minimum required rate of return is 15%. What is the exact rate of return? ANSWER: Blank 1
- An investment of P200,000 can be made in a project that will produce a uniform annual revenue of P145,000 for 5 years and then have a salvage value of 10% of the investment. Out-of-pocket costs for operation and maintenance will be P60,000 per year. Taxes and insurance will be 4% of the first cost per year. The company expects capital to earn not less than 22% before income taxes. Is this a desirable investment? What is the payback period of the investment? Compute the rate of return. What is the net annual profit using annual worth method? What is the net present worth of net cash flow? The rate of return is [ Select ] [ Select ] 26.87% 25.65% 26.65% 24.87% The net annual profit is [ Select ] [ Select ] P9,742.93 P10,742.93 P11,742.93 P12,742.93 The net present worth of net cash flow is [ Select ] [ Select ] P27,900.25 P28,900.25 P26,900.25 P30,900.25 Is this a desirable investment? [ Select ] [ Select ] Yes No The payback period is [ Select ] Select ] 1.33 2.01 3.20 1.87A bond with a face value of $1000 can be purchased for $800. The bond matures in 5 years and the dividend rate is 6%/yr. with dividends paid semi-annually. What is the effective interest rate on the bond purchase? Only typed AnswerMrs. Sally Selfish's company is considering a project that has a 10 year life and cost GHC 5000. It would save GHC 1.000 per year in operating cost and increase revenue by GHC 600 per year. It would be financed with a 10 year loan with an interest of 8% per year. The salvage value for the newly purchased equipment is zero. If the minimum annual rate of return (MARR) or hurdle rate is 14% and the tax rate is 25%, what is the net present value (NPV) of the project. Use the straight line method to calculate the depreciation.
- An investor purchased a one-acre lot on the outskirts of a city for $9000 cash. Each year he paid $80 of property taxes. At the end of 4 years, he sold the lot. After deducting his selling expenses, the investor received $15,000. What rate of return did he receive on his investment? Formulate the NetPW equation to calculate the ROR and use Microsoft Excel to calculate the ROR. Attach your excel worksheet.Tim wants to know the value of a real estate company he's planning to invest with. He expects a cash return of BD1500 at the end of first year, BD 3250 at the end of third year, and 12500 at the end of fifth year when the property is sold. Determine the value of an asset with 15% required return.An investment of P270,000 can be made in a project that will produce a uniform annual revenue of P185,400 for 5 years and then have a salvage value of 10% of the investment. Out-of-pocket cost for operation andmaintenance will be P81,000 per year. Taxes and insurance will be 4% of the first cost per year. The company expects capital to earn not less than 25% before income taxes. (a) Future Worth Method(b) Present Worth Method What is the future worth of net cash flows
- Swagelok Enterprises is a manufacturer of miniature fittings and valves. Over a 5-year period, the costs associated with one product line were as follows: first cost of $20,000, and annual costs of $16,000. Annual revenue was $25,000 and the used equipment was salvaged for $5,000. What rate of return did the company make on this product? The rate of return that the company made on the product is___%.An investment of P270,000 can be made in a project that will produce a uniform annual revenue of P185,400 for 5 years and then have a salvage value of 10% of the investment. Out-of-pocket cost for operation andmaintenance will be P81,000 per year. Taxes and insurance will be 4% of the first cost per year. The company expects capital to earn not less than 25% before income taxes. Is this a desirable investment? What is the payback period? Use the methods: (a) Future Worth Method(b) Present Worth MethodIf a company purchases an equipment for $P and uses it for N years, and the compaany's MARR is i%, what is the EUAC of the Capital Recovery? Group of answer choices $A(F/A, i%, N) $P(F/P, i%, N) %A(P/A, i%, N) $P(A/P, i%, N)