Question

Question 1 viera corporation is considering investing in a new facility. The estimated cost of the facility is $2,043,938. It will be used for 12 years, then sold for $715,200. The facility will generate annual cash inflows of $384,300 and will need new annual cash outflows of $150,800. The company has a required rate of return of 7%. Click here to view.py table. Calculate the internal rate of return on this project. (Round answer to o decimal place, e.g. 23.) Internal rate of return is Whether the project should be accepted. EL SEL BE The project be accepted. BALL

Answer 1

period of 3 Payback projects of a computation project - AA Cumulative your Cashinflows cash inflows 1 7980 7980 1036018240 in 13680 31920 31920 Since, the investment value has been covered at the middle of 3rd year, the pay back period will be in fraction of years pay back period = 2 years at all / 25060 – 1980710269 = 2 - years +0.5 years 2.5 years Project - BB year Cashinflows 11400 11400 Cumulative cash inflows 11406 22806 N T1400 34200 34200

Day back periods. 2 years and ( 25080 -22601 19.400.000) you = 2+0.2 - $.2 years Project - cc years - Cash inflows 14820 13680 12540 41040. t Cumulative Cash inflows 14820 ૨૬600 para uloyo sh. 3 pay back period = fi +(25080 – 14820) yes pay bacle perde L 12680 = 1+0.75 years 2. ft 1.75 years desirable privestment year, which is From the above the most year is project - cc, as the amount covered with in 175 least period.

The least desirable project is project - AA as it takes much times to to recover the investment amount.

part-6) Noiect-AA). year - Cashflows 12). NPV Cumulatin cash flow 1980 - 1980 10260 17142 " 0.893 0.797 1980 , 9162 10903 aroust 13680 28045 w I pay back period - 2 + ( 25080 -*17iui 19903 = 9+0.72 years = 2.72 years project - BB Cashflows 12% NPU year cumulatora Cash flows 11400 ) 400 11400 n- | Чоб 21580 3 11400 0.893 10180 0.797 9086 30666 30666 Payback period - 2+ 25080 - 21589 L 9086 -CQ+0.38] gear UD 2-38 gecas

project -cel year Cashflows 12% NPV 14820 Comubtive 14820 27036 37062 14820 13680 - 0.893 0:799 12216 10026 12580 37062 payback period - It's ir 25080 - 148207 L 12216 = [+0.84] years -1.84 years year from Cash the above, we assumed that ist flows are at the year begining. project is Therefore, the most desirable project-CC) The least desirable project is (project - AA