For IRR we set the cash flow
NPV = -110000 + (12000 - 3500)(P/A, i%, 35) + 20500(P/F, i%, 35) - 20800(P/F, i%, 10) = 0
At i = 5%, we have NPV = 12200.817 and at i = 7% NPV = -18679.654
Find IRR = 5% + (7% - 5%)*(12996.83/(12996.83 + 18679.654))
= 5.8%
This implies that IRR on this investment is 5.8%
7. A company invests AED 110,000 in a project with a lifetime of 35 years. The...
The Armstrong Manufacturing Company is considering two
projects, however only one project can be chosen. Prepare an
incremental analysis using the data provided. Include internal rate
of return (IRR) for each alternative. Prepare a report to be
presented to vice-president of manufacturing with your
recommendation. The company uses a depreciation. The company’s
effective income tax rate is 35%.
The Armstrong Manufacturing Company is considering two projects, however only one project can be chosen. Prepare an incremental analysis using the data...
A
company is considering the purchase of a capital asset for
$110,000.
Installation
charges needed to make the asset serviceable will total
$25,000.
The
asset will be depreciated over six years using the
straight-line method and an estimated
salvage value
(SV6)
of
$24,000.
The
asset will be kept in service for six years, after which it
will be sold for
$34,000.
During
its useful life, it is estimated
that the asset will produce annual revenues of
$25,000.
Operating
and maintenance...
Ashley Oakley was hired by the Battleground Nurseries (BN), a commercial nursery and landscape supply company in Oak Ridge, NC, as an Analyst in their newly-formed Project Office (PO). She reported to work and was assigned a small cubicle with an old laptop computer. Not what she had hoped for in her first job, but she was grateful to land her first job in a rapidly growing economy and resolved to give it her best effort. The PO reported to...
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