financial mathematics, Financial Accounting

Assignment Help:
abc limied is considering whether to invest $90000 in the purchase of a new item of equipment. The equipment would be paid for with a down-payment of $60000 and the payment of the remaining $30000 six weeks later.the company has already spent $8000 on design and feasibility work,and with the operational managemnet team are keen to purchase the equipment quickly.

the equipment is expected to have a life of three years,after which time it should have a resale value$5000.The equipment will be depreciated by the straight-line method over three years.Lt has been estimated that an investment of$20000 in working capital will be needed.

As a resuil of acquiring the equipment,it is expexted that will be an increase in annual cash profits,as follows:
year 1:$37000
year 2:$48000
year 3:$26000

(a)Calculate the expected NPV if the investment,if the cost of capital is 8%

(b)Calculate the expexted IRR of the investment,using the interpolation method and taking 12% as hte cost of capital for calculating another NPV.

Related Discussions:- financial mathematics

Calculate the npv for the purchase, 1. Lease vs. Buy Trasky Company is t...

1. Lease vs. Buy Trasky Company is trying to decide whether it should purchase or lease a new automated machine to be used in the production of a new product. If purchased, the

Calculate asset turnover, What is asset turnover - Asset turnover is a rat...

What is asset turnover - Asset turnover is a ratio which is considered as measures the effectiveness with which a business uses its assets in relation to the level of sales or inc

What is the number of shares, Terry Corporation had 300,000 shares of commo...

Terry Corporation had 300,000 shares of common stock outstanding at December 31, 2010. In addition, it had 90,000 stock options outstanding, which had been granted to certain execu

Finding the present value, We have discussed the computation of the future ...

We have discussed the computation of the future value in the previous sections; here let us work the process in opposite. Let us assume you have won a lottery ticket worth Rs. 1000

Draw budget constraint - budget line, You will gain welfare from consuming ...

You will gain welfare from consuming bread and chocolate. Your welfare is described numerically by W = 4B + 2C, where B denotes the quantity of bread you choose to consume, and C d

Intra company adjustments-group accounts, INTRA COMPANY ADJUSTMENTS In pr...

INTRA COMPANY ADJUSTMENTS In preparing the consolidated balance sheet, the following items may require adjustments:. 1    Goodwill 2    Unrealized profit on closing inventory 3

Holding company, define the term of pre-acquisition diviend

define the term of pre-acquisition diviend

Explain the term reporting interval - management accounting, Explain the te...

Explain the term Reporting interval - Management accounting For most businesses, financial accounting reports are produced on an annual basis, though some large businesses prod

Determine the price of an asset paying - one period bond , Suppose the inte...

Suppose the interest rate for a one-period bond is 4%. (a) What is the price of an asset paying (1,1,1) which means 1 after 1 period, 1 after 2 periods, and 1 after 3 periods.

Write Your Message!

Captcha
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