Compute the projects IRR and NPV
Course:- Risk Management
Reference No.:- EM132112751

Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Risk Management

Respond to the following scenario with your thoughts, ideas, and comments. Be substantive and clear, and use research to reinforce your ideas.

Apix is considering coffee packaging as an additional diversification to its product line. Here's information regarding the coffee packaging project:

Initial investment outlay of $40 million, consisting of $35 million for equipment and $5 million for net working capital (NWC) (plastic substrate and ink inventory); NWC recoverable in terminal year Project and equipment life: 5 years Sales: $27 million per year for five years Assume gross margin of 50% (exclusive of depreciation)

Depreciation: Straight-line for tax purposes Selling, general, and administrative expenses: 10% of sales Tax rate: 35% Assume a WACC of 10%. Should the coffee packaging project be accepted? Why or why not?

Compute the project's IRR and NPV. In addition, answer the following questions: Do you believe that there was sufficient financial information to make a solid decision on what to do?

Was there further financial information that you required that was not provided to you?

What financial figure do you believe was the determinant to your decision and why?

How would you be able to apply this particular financial information to other situations? Discuss risk methodologies used in capital budgeting.


Verified Expert

Application of financial management tools like NPV and IRR is very important in order to check the viability of the project which the company will undertake. It can be said that in this presentation there will be revolution of a project using the above mentioned tools after which the viability of the project will be judged.

Put your comment
View Conversion
  1. user image

    I need the 150 notes for each slide, and Experts Mind provided me all the speaker notes for the following and also turnitin report along it. The services are simply awesome and really easy to use as their portal is quietly easy to access and easy to handle..

Ask Question & Get Answers from Experts
Browse some more (Risk Management) Materials
Build on something your classmate said. Explain why and how you see things differently. Ask a probing or clarifying question. Share an insight from having read your classmate'
Discuss the working capital requirements. Also explore the liquidity situation. What would be the working capital situation if the turnover doubles without change in the cur
What is the difference between a macro and a micro country risk? Give an example of each. How is expropriation included in a discounted cash flow analysis of a proposed foreig
About two thirds of all California almonds are exported. The ups and downs of the United State dollar, therefore, cause headaches for almond growers. To avoid these problems,
Identify the crisis and the federal agency(ies) and / or organization(s) that might be involved in helping to mitigate this crisis. Explain the role(s) of each agency that w
A case analysis either describing how the three lines of defense model is currently being used in a publicly traded company, or how you would implement a three lines of defe
Domestic partners can undertake a split-interest purchase of property and normal valuation rules would apply because the partners are not family members. In a stock redemption
ACC/544- Identify risk areas and the criteria to be used to determine likelihood, magnitude, velocity, and persistence. Link risk categories to financial statement assertions.