1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Ilya [14]
3 years ago
9

TR Trucking Company runs a fleet of​ long-haul trucks and has recently expanded into the​ Midwest, where it has decided to build

a maintenance facility. This project will require an initial cash outlay of $ 18 million and will generate annual cash inflows of ​$4.8 million per year for Years 1 through 3. In Year​ 4, the project will provide a net negative cash flow of ​$4.8 million due to anticipated expansion of and repairs to the facility. During Years 5 through​ 10, the project will provide cash inflows of $ 1.4 million per year.
a. Calculate the​ project's NPV and IRR where the discount rate is 11.2 percent. Is the project a worthwhile investment based on these two​ measures? Why or why​ not?

b. Calculate the​ project's MIRR. Is the project a worthwhile investment based on this​ measure? Why or why​ not?
Business
1 answer:
Usimov [2.4K]3 years ago
4 0

Answer:

a. Calculate the​ project's NPV and IRR where the discount rate is 11.2 percent. Is the project a worthwhile investment based on these two​ measures? Why or why​ not?

  • NPV = -$4.5 million
  • IRR = 2.97%

The project should be rejected because the NPV is negative.

b. Calculate the​ project's MIRR. Is the project a worthwhile investment based on this​ measure? Why or why​ not?

  • MIRR = 8.57%

The project should be rejected because the NPV is negative. The IRR or MIRR do not matter at all if the NPV is negative.

Explanation:

the net cash flows are:

  • year 0 = -$18 million
  • year 1 = $4.8 million
  • year 2 = $4.8 million
  • year 3 = $4.8 million
  • year 4 = -$4.8 million
  • year 5 = $1.4 million
  • year 6 = $1.4 million
  • year 7 = $1.4 million
  • year 8 = $1.4 million
  • year 9 = $1.4 million
  • year 10 = $1.4 million

Using an excel spreadsheet we can determine the project's NPV and IRR:

NPV = $13.5 million - $18 million = -$4.5 million

IRR = 2.97%

We can also calculate MIRR using excel. We can use 11,2% finance rate and reinvestment rate:

MIRR = 8.57%

You might be interested in
a woman who was born and raised in a poor family becomes a regional supervisor for bank of america. she has experienced
Damm [24]

According to the functionalist theory, stratification is essential and unavoidable because it is required to persuade those who possess the requisite knowledge and abilities to choose jobs that are crucial to society.

According to the conflict theory, society is a dynamic system that is always undergoing change as a result of struggle for limited resources.

Max Weber, a German sociologist, devised the three-component theory of stratification, also referred to as Weberian stratification or the three class system, which used class, position, and party as different ideal types.

What is the pariah group? Meaning of Max Weber

19 (3): 313–318 History and Theory (1980) Abstract. In the scientific study of Judaism, the term "pariah" was first used by Max Weber, who described it as the voluntary separation of a people's religion and morals from their host society.

Learn more about functionalist theory here:

brainly.com/question/27181875

#SPJ4

4 0
1 year ago
Suppose that the central bank must follow a rule that requires it to increase the money supply when the price level falls and de
Ann [662]

Answer:

A). Decrease the money supply so interest rates rise.

Explanation:

This could be explained simply because change in money supply results in changes in price levels and/or a change in supply of goods and services. An increase in money supply results in a decrease in the value of money because an increase in money supply causes a rise in inflation. As inflation rises, the purchasing power, or the value of money, decreases.

A change in interest rates is one way to make that correspondence happen. A fall in interest rates increases the amount of money people wish to hold, while a rise in interest rates decreases that amount. A change in prices is another way to make the money supply equal the amount demanded.

6 0
3 years ago
Read 2 more answers
.What are economies of scale? Take an analysis example
Ludmilka [50]

Answer:

The summary of the given topic is explained below throughout the following portion.

Explanation:

  • The production phenomenon known might be why the additional expenses you generate that for each unit, are considered as Economies of scale.
  • Mostly since the greater optimized production operations you develop, the further optimized they are.

Example:

Because of its scale, perhaps the company could be interested in receiving credit standards.

6 0
3 years ago
you have calculated the pro forma net income for a new project to be 45,930. the incremental taxes are 22,260 and incremental de
Oxana [17]

Answer:

$62,160

Explanation:

Calculation for the operating cash flow

Using this formula

Operating cash flow=Pro forma net income+Incremental depreciation

Let plug in the formula

Operating cash flow = $45,930 + 16,230

Operating cash flow = $62,160

Therefore the operating cash flow will be $62,160

4 0
3 years ago
Bramble Corp. signed a three-month, zero-interest-bearing note on November 1, 2020 for the purchase of $498700 of inventory. The
creativ13 [48]

Answer:

Amortization of the discount  at December 31, 2020 will include: a debit to interest expense for $8,200.

Explanation:

Note is a promissory note with a written promise made by the borrower to the lender (payee) to pay a certain, definite sum at a specified date.

Since the face value of the note was $511,000 and the inventory was  $498,700, then discount on the note is $12,300.

Amortization of the discount  at December 31, 2020 will include: $12,300 / 3 x 2 months = $8,200.

7 0
4 years ago
Other questions:
  • Simon is the manager of the editorial department in a publishing company. Every time an editor in his team fails to fix the erro
    14·1 answer
  • A company has a process that results in 12,000 pounds of Product A that can be sold for $8 per pound. An alternative would be to
    14·1 answer
  • The price of strawberries falls from $1.50 to $1.00 per carton and the quantity demanded goes from 100,000 to 200,000 cartons. u
    13·1 answer
  • If selected to own and operate a Delivery Service Partner, what personal and business goals would you hope to achieve by startin
    15·1 answer
  • While negotiating salary with your prospective employer, if you suggest an initial target salary of $55,000, your employer will
    10·1 answer
  • The phrase _____________ is often used to describe the trend of putting "smarts" (meaning
    11·1 answer
  • The purpose of an advocacy advertisement is to:_______
    6·1 answer
  • Rally Synthesis Inc. manufactures and sells 100 bottles per day. Fixed costs are $22,000 and the variable costs for manufacturin
    9·1 answer
  • A client of yours has heard about private equity investing from some wealthy friends and asks you, the registered representative
    10·1 answer
  • g The effect on revenue due to a marginal increase in the input is called the marginal revenue product. Match the statements bel
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!