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    Financial payback, NPV, IRR, MIRR

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    Info. given on a 5 year project:

    Total equipment $1,500,000
    Shipping $ 35,000
    Installation $ 75,000
    Rise in inventory $ 150,000
    Rise in A/P from Inv. $ 30,000
    Produced per year 500,000 units @$2.00 per unit 1st two yrs/$2.50 last 3 yrs.
    Variable Costs 70% of Sales
    Improvment Investment $450,000 BEFORE project began
    Straight line depreciation
    Tax rate 40%
    WACC 10%
    Will pay project dividends 5%
    Int. expense on debt 7%
    Equip. salvage end of 5 yrs $100,000
    Process methodology $ 75,000 (sold at end of project).

    If you do not go thru with project, land could have been leased for $80,000 per yr.
    If you go thru with project, you will have a decrease of $45,000 per yr. in revenues from another product line.

    Calculate Financial payback, NPV, IRR, MIRR

    If annual inflation is 3%, calculate project's inflation adjusted Fin. payback, NPV, IRR and MIRR

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    https://brainmass.com/business/modified-internal-rate-of-return/financial-payback-npv-irr-mirr-60392

    Solution Preview

    Info. given on a 5 year project:

    Total equipment $1,500,000
    Shipping $ 35,000
    Installation $ 75,000
    Rise in inventory $ 150,000
    Rise in A/P from Inv. $ 30,000
    Produced per year ...

    Solution Summary

    This explains the steps to compute the Financial payback, NPV, IRR, MIRR

    $2.19

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