Decision on whether a project is accepted or rejected using, Ask an Expert

Finance

Decision on whether a project is accepted or rejected using NPV and IRR.

The Danforth Tire Company is considering the purchase of a new machine that would increase the speed of manufacturing and save money. The net cost of this machine is $66,000. The annual cash flows have the following projections.

Year Cash flows
1      $21,000
2      $29,000
3      $36,000
4      $16,000
5      $8,000

A) If the cost of capital is 10 percent, what is the net present value?

B) What is the internal rate of return?

C) Should the project be accepted? Why?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9161592

Have any Question?Write your Review or question?

Related Questions in Basic Finance

Question - you are promised 10000 a year for six years

Question - You are promised $10,000 a year for six years after which you will receive $5,000 a year for six years. If you can earn 8 percent annually, what is the present value of this stream of payments?

Find the present value of this bond assume annual yield of

Find the present value of this bond. Assume annual yield of maturity is 4% and its Semiannual payments. When the Face value (FV) = $, 5000, coupon Payment (CPN) + 181.25, remaining payments (N) = 10.

Question -1 how did the liability of newness affect justin

Question - 1. How did the "liability of newness" affect Justin Gold as he attempted to formally launch his entrepreneurial venture? 2. What key employees did Gold recruit to be members of his new-venture team? 3. What cr ...

Youre thinking about borrowing a 2000 personal loan the

You're thinking about borrowing a $2000 personal loan. The interest rate on the loan is 12% with quarterly compounding. You believe you can make a quarterly payment of $500. How many years will it take you to pay off the ...

A biased coin has probability 06 of turning up heads you

A biased coin has probability 0.6 of turning up heads. You win $x if a head comes up and you lose $y if a tail comes up. If your expected winnings is $0, what is the relationship between x and y?

Find the present value of the following ordinary annuities

Find the present value of the following ordinary annuities (See hint for Problems 4-9): $400 per year for 10 years at 10%. $200 per year for 5 ears at 5% $400 per year for 5 years at 0%. Now rework parts a, b and c assum ...

What are some methods a company use to ensure the entire

What are some methods a company use to ensure the entire organization understands and is involved with promotions that include their brand image? Can you share examples?

What is the amount of the excess of the original sales

What is the amount of the excess of the original sales price of common stock over its par value called? Retained Earnings Common Stock Additional paid-in-capital Preferred stock Common equity

Calculation of individual costs and wacc lang enterprises

Calculation of individual costs and WACC Lang Enterprises is interested in measur-ing its overall cost of capital. Current investigation has gathered the following data. The firm is in the 21% tax bracket. Debt The firm ...

How do i calculate equity valuation-gordon growth model on

How do I calculate Equity Valuation-Gordon growth Model on TI-BA II Plus calculator. A company just paid a dividend of 2.30 to its shareholder. It estimates that future growth will be at 2%. What is the value of the stoc ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert