IRR is the Rate at which PV of Cash Inflows are equal to PV of Cash Outflows
Year | CF | PVF @12% | Disc CF |
0 | $ -11,69,200.00 | 1.0000 | $ -11,69,200.00 |
1 | $ 2,60,000.00 | 0.8929 | $ 2,32,142.86 |
2 | $ 3,60,000.00 | 0.7972 | $ 2,86,989.80 |
3 | $ 3,60,000.00 | 0.7118 | $ 2,56,240.89 |
4 | $ 2,60,000.00 | 0.6355 | $ 1,65,234.70 |
5 | $ 2,60,000.00 | 0.5674 | $ 1,47,530.98 |
6 | $ 1,60,000.00 | 0.5066 | $ 81,060.77 |
NPV | $ -0.00 |
Thus IRR is 12%
(IRR with uneven cash flows) The Tiffin Barker Corporation is considering introducing a new currency verifier...
(Calculating free cash flows) Racin' Scooters is introducing a new product and has an expected change in EBIT of $465,000. Racin' Scooters has a 31 percent marginal tax rate. The project will produce $110,000 of depreciation per year. In addition, the project will cause the following changes in year 1: 6. What is the project's free cash flow in year 1? The project's free cash flow in year 1 is $. (Round to the nearest dollar.) i Data Table Х...
(IRR of uneven cash-flow stream) Microwave Oven Programming, Inc. is considering the construction of a new plant. The plant will have an initial cash outlay of $15 million, and will produce cash flows of $5 million at the end of year 1, $6 million at the end of year 2, and $4 million at the end of year 3 through 5. What is the internal rate of return on this new plant?
udicates problems in Excel Study Problems All Study Problems are available in MyLab Finance. The X icon indicates problems Mylab format available in MyLab Finance. LO2 10-1. (Payback Period) What is the payback period for the following set of cash flowe YEAR CASH FLOWS --- $11,300 3,400 4,300 3,600 4,500 3,500 x 10-2. (IRR calculation) Determine the IRR on the following projects: a. An initial outlay of $10,000 resulting in a single free cash flow of $17,182 after 8 years...
(IRR of uneven cash-flow stream) Microwave Oven Programming, Inc. is considering the construction of a new plant. The plant will have an initial cash outlay of $12 million, and will produce cash flows of $4 million at the end of year 1, $ 5 million at the end of year 2, and $3 million at the end of years 3 through 5. What is the internal rate of return on this new plant? The internal rate of return on this...
NPV and IRR analysis of projects Thomas Company is considering two mutually exclusive projects. The firm, which has a cost of capital of 14%, has estimated its cash flows as shown in the following table: a. Calculate the NPV of each project, and assess its acceptability. b. Calculate the IRR for each project, and assess its acceptability. a. The NPV of project A is $ (Round to the nearest cent.) Х i Data Table (Click on the icon located on...
IRR-Mutually exclusive projects Bell Manufacturing is attempting to choose the better of two mutually exclusive projects for expanding the firm's warehouse capacity. The relevant cash flows for the projects are shown in the following table: B . The firm's cost of capital is 13%. a. Calculate the IRR for each of the projects. Assess the acceptability of each project on the basis of the IRRs. b. Which project is preferred? a. The internal rate of return (IRR) of project X...
Your company is considering a project with the following cash flows: Initial outlay = $4,119 Cash flows Years 1-8 = $888/Year Compute the IRR on the project.
(Discounted payback period) Gio's Restaurants is considering a project with the following expected cash ows:3I the projects appropriate discount rato s discounted payback period? years. (Round to two decimal places.) The project's discounted payback period is Data Table PROJECT CASH FLOW -$120 million 95 million 65 million 85 million YEAR 2 110 million 4 (Click on the icon located on the top-right comer of the data table above in order to copy its contents into a spreadsheet.) Print Done
IRR—Mutually exclusive projects Bell Manufacturing is attempting to choose the better of two mutually exclusive projects for expanding the firm's warehouse capacity. The relevant cash flows for the projects are shown in the following table: . The firm's cost of capital is 12%. a. Calculate the IRR for each of the projects. Assess the acceptability of each project on the basis of the IRRs. b. Which project is preferred? 0 Data Table a. The internal rate of return (IRR) of...
Exercise 24-1 Payback period computation; uneven cash flows LO P1 Beyer Company is considering the purchase of an asset for $360,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Net cash flows Year 1 $80,000 Year 2 $50,000 Year 3 $70,000 Year 4 $250,000 Year 5 $13,000 Total $463,000 Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback...