The Drow ranger Company is considering a new product line to supplement its range line. It is anticipated that the new product line will involve cash investment of P700,000 at time 0 and P1,000,000 in year 1. After- tax cash inflows of P250,000 are expected in year 2, P300,000 in year 3, P350,000 in year 4 and P400,000 each year thereafter through year 10. Though the product line might be viable after year 10, the company prefers to be conservative and end all calculations at that time. a.) If the required rate of return is 15%, what is the net present value of the project? b.) What is the internal rate of return? c.) What is the project's payback period?
The Drow ranger Company is considering a new product line to supplement its range line. It is anticipated that the new product line will involve cash investment of P700,000 at time 0 and P1,000,000 in year 1. After- tax cash inflows of P250,000 are expected in year 2, P300,000 in year 3, P350,000 in year 4 and P400,000 each year thereafter through year 10. Though the product line might be viable after year 10, the company prefers to be conservative and end all calculations at that time. a.) If the required rate of return is 15%, what is the net present value of the project? b.) What is the internal rate of return? c.) What is the project's payback period?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The Drow ranger Company is considering a new product line to supplement its range line. It is anticipated that the new product line will involve cash investment of P700,000 at time 0 and P1,000,000 in year 1. After- tax
a.) If the required
b.) What is the
c.) What is the project's payback period?
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