Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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A proposed processing plant requires a fixed-capital investment of Php 9,008,632 and a working capital of Php 1,750,966. Annual depreciation is 6% of the fixed-capital investment. If the annual profit is Php 2,019,826, determine the payback period.
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- GRIP Industries is considering a new assembly line costing RM1,600,000. The instaliation will ncur a cost of RM350,000 and after-tax training cost of RM105,000. The assembly line will be fuly depreciated using the simplified straight-ine method over its 3- year depreciable life. Net working capital is expected to increase by RM420,000 at start and the full amount ill be recovered at the end of up year 3. First year sales are estimated to be RM1,800,00, and illincrease by RM200,000 each year throughout the 3-year period. Variable cost is 55% from sales, while fixed cost takes up RM225,000 per year. At terminal, the assembly line can be sold at RM700,000. GRIP is in the 35 percent tax bracket and has a required rate of returm of 12% A) Calculate the total initial outlay of the project. B) Determine the annual cash flow for the project from year 1 to year 3. C) Calculate the terminal cash flow at year 3. D) Calculate the net present value (NPV) and intermal required rate of return (IRR)…arrow_forwardDetermine the average rate of return for a project that is estimated to yield total income of $386,400 over four years, has a cost of $579,600, and has a $64,400 residual value.arrow_forwardDetermine the average rate of return for a project that is estimated to yield total income of $356,400 over 4 years, costs $601,000, and has a $59,000 residual value.%arrow_forward
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