Calculate the NPV, IRR, Profitability Index, Payback Period
Not what you're looking for?
New equipment would permit the manufacture of 100,000 additional spark plugs every year. It will have a useful life of 5 years with no salvage value. The equipment will be depreciated using straight-line method. The plugs sell for $20 and cost $8 to manufacture using the new equipment. Indirect costs are remain the same. The equipment cost $3,000,000 to purchase and install. Company's tax rate is 34%.
The capital structure will remain intact in financing this equipment. Cost of capital is 10.8%. Calculate the NPV, IRR, Profitability Index, and Payback Period for the project.
Purchase this Solution
Solution Summary
Your tutorial is in excel, attached. The after tax cash flows are mapped out for you and instructional notes are next to the computations to assist you.
Education
- BSc, University of Virginia
- MSc, University of Virginia
- PhD, Georgia State University
Recent Feedback
- "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
- "Thank, this is more clear to me now."
- "Awesome job! "
- "ty"
- "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Basics of corporate finance
These questions will test you on your knowledge of finance.
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
Lean your Process
This quiz will help you understand the basic concepts of Lean.
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Change and Resistance within Organizations
This quiz intended to help students understand change and resistance in organizations