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Internal Rate of Return (IRR)

Internal Rate of Return in Percentage

With a $150,000 output and a net cash inflow of $40,000 per year from the project for the next 5 years, what is the internal rate of return? Is it 9%, 10%, 11%, 12%, 13%? Please show me how to solve this. Thank You.

Internal Rate of Return of a Project

Given the following information and assuming straight-line depreciation to zero, what is the IRR of this project? Initial investment = $6,000; life = 4 years; cost savings = $2,500 per year; salvage value $2,000 at the end of year 4; tax rate = 35%; discount rate 10%.

Mutually Exclusive Projects and Net Cash Flow

4. The director of capital budgeting for Giant Company Inc. has identified two mutually exclusive projects, L and S, with the following expected net cash flows: Expected Net Cash Flows Year Project L Project S 0 ($200) ($200) 1 20 140 2 120 100 3 160 40 Both projects have a cost of ca

Find the present value of each of the following cash flows:

Here are the examples: 1. How do you find the present value of each of the following cash flows?: a. $50,000 a year for 20 years, @6% b. $2.50 a year for ever @ 12% c. $65 a year for four years and $1065 in the 5th year, @8% d. $1,250/month for 30 years, @5.75% 2. When the following cash flows are listed as follows

Internal Rate of Return and Free Cash Flow

1) Determine to the nearest percent the IRR on the following projects: A) An initial outlay of $ 10,000 resulting in a free cash flow of $ 2000 at the end of year 1, $ 5000 at the end of year 2, and $ 8,000 at the end of year 3. B) An initial outlay of $ 10,000 resulting in a free cash flow of $ 8000 at the end of year 1

NPV and Internal Rate of Return

An investment project requires an outlay of $100,000, and is expected to generate annual cash inflows of $28,000 for the next 5 years. The cost of capital is 12 percent. How do I find the NPV and the internal rate of return for the project?

Practice 18-16 Ranking by the Internal Rate of Return Method

I don't understand this problem at all. Practice 18-16 Ranking by the Internal Rate of Return Method The company is considering eight capital investment projects. The company has a minimum required internal rate of return of 13%. Screen and rank the eight capital investment projects using the internal rate of return. P

Payback, Net Present Value & Internal Rate of Return Method

Nucore Company is thinking of purchasing a new candy wrapping machine at a cost of $370,000. The machine should save the company approximately $70,000 in operating costs per year over its estimated useful life of 10 years. the salvage value at the end of the 10 years is expected to be $15,000. 1. What is the machine's payback

Income Tax Effects

Income Tax Effects Kade Corporation is considering purchasing a new piece of equipment. The equipment will cost $135,000 and is expected to have a useful life of five years. The gross cash flow savings is estimated to be $50,000 per year. The company elects not to take the expense deduction and will depreciate the full cost of

Net Operating Income/Residual/ Find K

I already have the answer (k*=25.91%) to this problem from my text book but I need to know step by step how they got to the answer. All that is provided in the example is: Price = NOI1/(1+K*)^1 + NOI2/(1+K*)2........+ (NOI5 + Residual)/(1+k*)^5 where K* = expected before-tax return on an unlevered investment NOI= Net Oper

Fundamental Managerial Accounting Concepts

Textbook Fundamental Managerial Accounting Concepts 3rd Edition 1. Mindy Norton Company reported the following information for 2004: Sales $500,000 Average Operating Assets $300,000 Desired ROI 10% Net Income $ 45,000 Based on this information, calculate the company's residual income

Calculate each plan's NPV and IRR

) Threadnot, Inc.'s President wants to see the NPV and IRR of each of the above plans. The appropriate discount rate is 20%. Calculate each plan's NPV and IRR. Year 0 1 2 3 Plan a $-8000 $8,000 $700 $700 plan b $-8000 $900 $900 $10000

Question about IRR and NPV

A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: 0 1 2 3 4 | | | | | S -$1,000 $900 $250 $10 $10 L -$1,000 $0 $250 $400 $800 The company's WACC is 10%. What is the IRR of the better project? I'm not sure that the better

Internal Rate of Return/Coefficient of Variation

(This problem is attached for clarity). 1. Oliver Stone and Rock Company uses a process of capital rationing in its decision making. The firm's cost of capital is 12 percent. It will invest only $80,000 this year. It has determined the internal rate of return for each of the following projects.

Average Return IRR

4) A mutual fund earned 10% over the last year, 12% over the last two years, and 15% per year over the last 3 years. (all returns are geometric averages). If you invested $10,000 per year in the fund, in each of the last three years, how much would your investment be worth today. What is your average return IRR?

Discounted Cash Flows: Background Data

Background Data and Information You are the CFO of Delta International, a manufacturer of ski bindings. You are planning your capital budget for next fiscal year and have gathered the following information: Your investment banker indicates that if Delta issues four million dollars in bonds the expected yield will be 7 pe

Calculate: Payback, Net Present Value, and the IRR

Nucore Company is thinking of purchasing a new candy-wrapping machine at a cost of $370,000. The machine should save the company approximately $70,000 in operating costs per year over its estimated useful life of 10 years. The salvage value at the end of 10 years is expected to be $15,000. (Ignore income tax effects.) Please

What is the current value of the expected cash flow stream?

You intend to set up a mail order gift basket business in your home while you attend college. You expect the following cash flows: Year Cash Flow 1 $5,000.00 2 $8,000.00 3 $1,200.00 4 $1,400.00 You can borrow at 11% to start this business. What is the current value of the expected cash flow str

What is the Project's IRR

Woodgate Inc. is considering a project with the following after-tax operating cash flows (in millions of dollars): Project Year Cash Flow 0 -$300 1 125 2 75 3 200 4 100 The project has a WACC of 10%. What is the project's IRR?

Net Present Value and Internal Rate of Return

A new computer system will require an initial outlay of $20,000 but it will increase the firm's cash flows by $4,000 a year for each of the next 8 years. Is the system worth installing if the required rate of return is 9 percent? What if it is 14 percent? How high can the discount rate be before you would reject the proj

Calculate the IRR of Two Projects

Two projects being considered by a firm are mutually exclusive and have the following projected cash flows: Project A Project B Year Cash Flow Cash Flow 0 ($100,000) ($100,000) 1 39,500

NPV problems

How do I use EXCEl to calculate the NPV and IRR of the following scenario: - Cost (Year o): $10,000. - Year 1 Return: 3,000 - Year 2 Return: 3000 - Year 3 Return: 5,000 Discount Rate:10%

NPV & IRR Cash Flow Analysis for Mesa Products Inc.........

1. Mesa Products Inc. requires a new machine to produce a part for a solar air conditioner. Two companies have submitted bids, and you have been assigned the task of choosing one of the machines. Cash flow analysis indicates the following: Year Machine A Machine B 0 -1,000 -1,000 1 0 417 2 0

Net Present Value, Modified Internal Rate of Return and Regular Payback

Pure Life (a juice company) owns a building, which is fully depreciated. Equipment Cost: $200,000. plus an additional $40,000. for shipping and installation Inventories would rise by $25,000. and accounts payable would go up by $5,000. All of these costs would be incurred at t =0. The machinery could be depreciated und

Evaluating Performance

P.1 You know that when expanding and investing in projects overseas as Acme plans to, it is essential to understand such things as return on equity (ROE) and internal rate of return (IRR). Using Internet sources (you may want to start with the websites listed below) gather information on ROE and IRR. Post a two to three par

Find the IRR

The following informtion applies, can this be solved using excel? Equity shares outstanding - 20 million Stock price per share - 10 Yield to maturity debt - 12 Book value of interest-bearing debt - 180 million Coupon interest rate on debt - 7% Market value debt - 200 million Book value of equity 100 million Cost o

What is the IRR of this project?

Suppose a project costs $300 and produces cash flow of $100 over each of the following six years. What is the IRR of this project?