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exis [7]
3 years ago
7

Internal Rate of Return Richins Company produces automobile engine parts. The company is examining the possibility of investing

in a new production system that will reduce the costs of the current system. The new system will require a cash investment of $11,551,968 and will produce net cash savings of $1,800,000 per year. The system has a projected life of 10 years.Required:
Calculate the IRR for the new production system.
Business
1 answer:
Vesnalui [34]3 years ago
4 0

Answer:

IRR = 9%

Explanation:

The internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.

IRR can be calculated using a financial calculator:

Cash flow in year 0 = $-11,551,968 

Cash flow each year from year 1 to 10 = $1,800,000

IRR = 9%

To find the IRR using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.

I hope my answer helps you

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For each of the following corporate formations, (1) write the amount of gain or loss that will be recognized by the shareholders
Maslowich

Answer:

Back Stop, Inc.

1. The amount of gain or loss that will be recognized by the company:

a. $30,000 gain

b. $80,000 loss

2. The corporation's basis in the property after the transfer:

a. $150,000

b. ($80,000)

Explanation:

1) Data and Calculations:

a. Building $150,000 Capital, Kelly $120,000 Unrealized gain $30,000

b. Unrealized loss $80,000 Capital, Kelly $80,000

2) The building contributed by Kelly is worth $150,000 for the corporation.  However, the contribution by John is worth nothing in real terms.  Instead, an unrealized loss is being suffered by the corporation.

3 0
2 years ago
The Jackson-Timberlake Wardrobe Co. just paid a dividend of $2.15 per share on its stock. The dividends are expected to grow at
tekilochka [14]

Answer:

a)  

$34.4

b)

$37.20

c) $59.57

Explanation:

Given:

Dividend paid = $2.15

Growth rate = 4% = 0.04

Required return = 10.5% = 0.105

Now,

a) Present value = \frac{\textup{Dividend paid}\times\textup{(1 +growth rate)}^n}{\textup{(Required return-Growth rate)}}

for the current price n = 1

thus,

Current price = \frac{\textup{Dividend paid}\times\textup{(1+growth rate)}^n}{\textup{(Required return-Growth rate)}}

=  \frac{\textup{2.15}\times\textup{(1 +0.04)}^1}{\textup{(0.105-0.04)}}

=  $34.4

b) Price in 3 years

i.e n = 3

= \frac{\textup{Dividend paid}\times\textup{(1 +growth rate)}^n}{\textup{(Required return-Growth rate)}}

=  \frac{\textup{2.15}\times\textup{(1 +0.04)}^3}{\textup{(0.105-0.04)}}

=

$37.20

c) Price in 15 years

i.e n = 15

= \frac{\textup{Dividend paid}\times\textup{(1 +growth rate)}^n}{\textup{(Required return-Growth rate)}}

=  \frac{\textup{2.15}\times\textup{(1 +0.04)}^{15}}{\textup{(0.105-0.04)}}

=  $59.57

4 0
3 years ago
What needs to be determined when estimating cash flows for a potential new project?.
Serjik [45]

Answer:

The incremental after-tax cash flows associated with the project

3 0
2 years ago
What does an risk management plan addendum look like?
S_A_V [24]

Explanation:

Risk Management is the integral part of any project and it is an ongoing process. When the risk management process is initiated at the beginning of the project, most of the risks involved may be identified and it can be controlled or some measures to counter act them can be developed like  involved with the Change Management or the program management.

Risk management addendum contains :

-- introduction

-- target levels

-- acute exposure

-- Estimation of Health Effects for Lead

-- Cumulative Risk

The risk characterization must clearly exhibit the core values of consistency, transparency, reasonableness and clarity.

4 0
3 years ago
Shown below are selected data from the financial statements of Noble Computers. (Dollar amounts are in millions, except for the
hram777 [196]

Answer:

c. 21%.

Explanation:

the return on equity will be the net income divided by the total equity

income  115,000,000

equity   540,000,000

return on equity = 0,212962962962963 = 21%

This ratio can e interpretate as follows:

For each dollar invested from owners into the company the ent income increases by 21 cents or it represent 21% of the equity is achieve in earnigns every years.

7 0
3 years ago
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