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a) Use excel of a financial calculator to estimate the IRR of the following business opportunity: Initial cost of $100,000, expected pre-tax annual cash flows of $54,000 for the next 7 years, and a 20% small business tax rate. There are no assets to depreciate but there is a yearly $25,000 pre-tax opportunity cost which recognizes the time you spend operating the business.
b) For this type of risky investment, you would normally require at least a 16% rate of return to compensate for the business risk alone. Assuming however that you can access a line of credit with a fixed rate of 6%, what is the minimum amount of debt capital ($$) that you would have borrow before the project becomes profitable to finance?
c) What is the most important difference between the NPV and IRR methodologies? Discuss briefly whether or not you feel that distinction would be important to this particular case.
1. Motives - This section should include a detailed discussion of the main motives for the proposed acquisition supported by the latest academic literature and advances within the
I have been given 3 different types of projects. They state the IRR and how much the project will add. The question goes on to give a WACC with break points. The question wants
"The agency theory concept was initially developed by Means and Berle (1932), who argued that due to a continuous dilution of equity ownership of large corporations, ownership and
determine the pay \back period for the project.
how do you calculate it
Need assignment help. Finance, needs to be done in excel and word.
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