Compute the npv of the project-compute its payback period

Assignment Help Financial Management

Reference no: EM131910316

MRE Sales is looking to acquire an ERP and has asked for your assistance. The company can purchase the system outright for $120,000 plus 5% sales tax, and delivery and install charges of $2,000. The ERP is expected to last 5 years and have a salvage value of $8,000. The company will use straight-line depreciation over the 5-year life. Its income tax rate is 40%. The company’s cost of capital is 12%. The system is expected to bring annual benefits of $35,000 over the 5-year period.

Showing all calculations in Excel:

Compute the NPV of the project

Compute its payback period

Reference no: EM131910316

Questions Cloud

Compute fair market value and evaluate the stock : Use the Dividend Discount Model (DDM) to compute a fair market value and evaluate the stock.

Mega awesome value requires return on capital projects : Hyper Mega Awesome Value Inc requires a return on capital projects of 11%. Should they make the investment?

What is the required rate of return : Farley Inc. has perpetual preferred stock outstanding that sells for $34.00 share and pays a dividend of $3.00 at the end of each year. What is required return.

Calculate the initial weighted average cost of capital : compute the cost of preferred stock. Calculate the initial weighted average cost of capital using Ke.

Compute the npv of the project-compute its payback period : Compute the NPV of the project Compute its payback period

Shares of stock outstanding-what is stock value per share : If Scampini has 40 million shares of stock outstanding, what is the stock's value per share?

The required cash for the necessary down payment : Assuming you have the required cash for the necessary down payment

The black-scholes option pricing model : the continuously compounded risk-free rate is 3.6 percent. What is the value of d1 as it is used in the Black- Scholes option pricing model?

Restored as result of arbitrage transactions : Explain how IRP will be restored as a result of arbitrage transactions you carry out above.

User Account

All Pages