Problemx inc has a project with 10 year life the project, Ask an Expert

Accounting

Problem:

X Inc has a project with 10 year life. The project requires a $1.2M investment in equipment. At the end of 10 years, the project is terminated and the equipment has no salvage value. NOI each year as follows: sales: 1.7M, Variable Costs: 1.2M, Contrib. Margin: 500K, Fixed Costs: 200K, Depreciation: 120K, total fixed: 320K, NOI: 180K. All of the above except deprecate are cash flows. Company's real rate of return is 12%.

Required:

Question 1: What is project's net Present Value?

Question 2: What is IRR to the nearest percent?

Question 3: What is payback period?

Question 4: What is the simple Rate of Return?

Note: Please provide reasons to support your answer.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91165520

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