Compute the project internal rate of return

Assignment Help Accounting Basics
Reference no: EM132787607

Dasher, Inc., is considering a project that would have a five-year life and would require a $1,000,000 investment in equipment. At the end of five years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows:

Sales                                                   $950,000
Variable Expenses                                    500,000
Contribution Margin                                     450,000

Fixed Expenses:

Fixed out-of-pocket cash expenses                 100,000
Depreciation                                                  50,000
                                                                   150,000
Net Operating Income                                     $300,000

All of the above items, except for depreciation, represent cash flows. The company's required rate of return is 10%.

Required:

Problem a. Compute the project's net present value.

Problem b. Compute the project's internal rate of return to the nearest whole percent.

Problem c. Compute the project's payback period.

Reference no: EM132787607

Questions Cloud

Expression between prokaryotes and eukaryotes : What are the 4 differences in gene expression between prokaryotes and eukaryotes?
Prepare the journal entry to record interest on june : Prepare the journal entry to record interest on June 30, 2011, using the straight-line method. Prepare the journal entry to record interest on December
What is the company breakeven point given the sales : The budget assumes the sale of 20,000 units of Chilli, 100,000 units of Vegetable Soup, What is the company breakeven point given the sales
Who might have possession of the computers during each step : Walk through the process of removal of computers from employees' work areas to the client's secure location and eventually to the Azorian facility.
Compute the project internal rate of return : Compute the project's internal rate of return to the nearest whole percent. Dasher, Inc., is considering a project that would have a five-year life
Discussing government planning or entrepreneurial innovation : Find a peer-reviewed scholarly journal article discussing government planning and/or entrepreneurial innovation. Complete a review of the article by writing.
What is the taxable income for hester : In 2017, Hester received $10,000 of qualified dividends and he received $6,200 from a part time job. What is his taxable income for 2017?
Find the implied volatility of the stock : Suppose that a stock price at time zero is S0 = £57. The continuously compounded risk free rate is 2.7%. Find the implied volatility of the stock
How the nurse would use professional communication : Develop a therapeutic relationship with the patient in the case scenario - Discuss how the nurse would use professional communication to ensure patient safety

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd