Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

1) Excel inc, is considering the investment in latest plant= $3 million. Project will be financed with the loan= $2,000,000 which will be repaid over next five years in equivalent annual end of year instalments at the rate of 6.5 percent pa. Suppose straight-line depreciation over the five-year life, and no taxes. Projects cash flows before loan repayments and interest are given in the table below. Cost of capital= 13.35% pa (necessary rate of return on the project). Salvage value= $200,000 is expected at the ending of year five and is included in = cash flows for year five below. Avoid taxes and inflation.

Year                 Cash Inflow
Year One            850,000
Year Two            900,000
Year Three          800,000
Year Four           900,000
Year Five            950,000

You are needed to compute:

(i) The annual loan repayment and a repayment schedule.

(ii) NPV of the project

(iii) the IRR of the project

(iv) AE, annual equal for the project(AE or EAV)

(v) PB, the payback in years (to one decimal place)

(vi) ARR, the accounting rate of return (gross)

(vii) PI (present value index or profitability index)

(viii) Is project acceptable? You should provide the decision for each of methods in parts (ii) to (vii). describe why or why not (give full description)?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M914208

Have any Question? 


Related Questions in Basic Finance

1 how do the various labor standards promulgated by

1. How do the various labor standards promulgated by international organizations affect the MNE? 2. How do EU directives (such as those developed in the area of HR) impact member states and MNEs? 3. How do US extraterrit ...

The whilst co is analyzing a project that has projected

The Whilst Co. is analyzing a project that has projected sales of $189,400 and costs of $102,300. The project requires an investment in inventory of $15,000 plus another $28,000 in accounts receivable. Fixed assets of $8 ...

Graph the means in figure 914 for the interaction between

Graph the means in Figure 9.14 for the interaction between self-esteem and ego threat. Does the graph look like one in which an interaction is present? Why or why not?

Both old line industries and new tech inc use the irr to

Both Old Line Industries and New Tech, Inc., use the IRR to make investment decisions. Both firms are considering investing in a more efficient $4.5 million mail-order processor. This machine could generate after-tax sav ...

1 compare and contrast the theories of absolute and

1. Compare and contrast the theories of absolute and comparative advantage. 2. How does the Heckscher-Ohlin (HO) theory build on the earlier work of absolute and comparative advantage? 3. The Leontief Paradox finds oppos ...

1 briefly describe the three key services that the

1. Briefly describe the three key services that the financial system provides to savers. 2. A student remarks: When I pay my insurance premiums, I never get that money back. My insurance premiums represent payments for a ...

1 what is the difference between the probability of a stock

1. What is the difference between the probability of a stock out and the magnitude of a stock out? 2. Data suggest that while overall average inventory levels are declining, the relative percentage being held by manufact ...

For each of the following six scenarios say whether the

For each of the following six scenarios, say whether the value of the dollar will appreciate, depreciate, or remain the same relative to the Japanese yen. Explain each answer. Assume that exchange rates are freely floati ...

Abc corp has a target capital structure of 60 percent

ABC corp has a target capital structure of 60 percent common stock, 5 percent preferred stock and a 35 percent debt. It's cost of common stock is 10% , the cost of preferred is 5% and the pretax cost of debt is 7%. The r ...

Determine the sources of capital for canon inc ticker jcnn

Determine the sources of capital for Canon Inc. (ticker: J:CN@N) in each of the last five years. How much capital was raised through internal sources, and how much was raised through external sources? Compare the sources ...

  • 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

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen