Calculate the npv-irr and mirr, Finance Basics

Task:

  • Decide upon 2 mutual exclusive projects.
  • Calculate the income statement, balance sheet, and statement of cash flows for all year
  • Calculate the NPV, IRR, and MIRR.
  • Check if IRR and MIRR are consistent with the NPV for various rates of cost of capital.

Assumptions:

  • One project has a reinvestment in the middle of its productive life of 50% of the initial cost
  • Project length is at least 4 years
  • 30% annual growth of Revenues
  • Profit Margin 2% in t=0 (that might change over time)
  • Dividend is 0% of net income
  • You are operating at 100% capacity in year zero and thereafter
  • Initiating the investments will have some impact on net working capital
  • At least one of your balance sheet entries, such as inventory, should be forecasted based on a regression (utilize the attached historic data)
  • If you need additional financing, finance 40% with debt and 60% with equity
  • You will finance 40% of the asset with debt in either case
  • Taxes are 35%, cost of debt is 5% and cost of equity is 12%
  • Customers pay after 60 days
  • Suppliers are paid after 90 days
  • If you sell your assets in the final year you will incur an extraordinary gain
Posted Date: 3/8/2013 4:23:13 AM | Location : United States







Related Discussions:- Calculate the npv-irr and mirr, Assignment Help, Ask Question on Calculate the npv-irr and mirr, Get Answer, Expert's Help, Calculate the npv-irr and mirr Discussions

Write discussion on Calculate the npv-irr and mirr
Your posts are moderated
Related Questions
Stock Exchange Market The Idea and improvement of a Stock Exchange Stock exchange also identified as stock markets are special "market places" whereas already held bond

on may 1, counts, inc has a balance of $1000 in office supplie. during may the company buys $500 more of the office supplies. on may 31 the company counts the supplies and finds 20

Shareholders and Management There is near separation of ownership and management of the firm. Landlord employs professionals as managers who such have technical skills. Manage

BAC is considering an issue of preferred stock.  The dividends are 8.12% of the $25 par value. a.    If the present price is $26.25 per share, what is the return on the preferre

A. Michael Spence An American economist who was awarded by the Nobel Memorial Prize in Economic Sciences. Spence is a lecturer of management at Stanford University in the Gradu


Example of Sales Method The balance sheet of XYZ Ltd as on date 31st December 2002 is as following:          Net fixed asset Current assets   F

Creditors Payment Period Ratio Creditors payment period =   365/ Creditors turnover                                           = (365 x Average creditors)/Annual credit pu

Profitability in relation to investment - Profitability Ratio a) Return on Investment (ROI) or return on total asset (ROTA) = (Net profit/ Total asset) x 100 The ratio i

Setting a Reorder Point - ROP  Once the order quantity has been determined, the next question to be settled is when to place the order. If an order is released and it takes th