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abruzzese [7]
3 years ago
15

Your factory has been offered a contract to produce a part for a new printer. The contract would last for three​ years, and your

cash flows from the contract would be $ 5.04 million per year.Your upfront setup costs to be ready to produce the part would be $ 8.01 million. Your discount rate for this contract is 7.6 %.What is the​ IRR?
Business
1 answer:
sweet [91]3 years ago
6 0

Answer:

IRR = 43.51%

Explanation:

<em>It is the discount rate that equates the present value of cash inflow to the present value of cash outflow from the same project.</em>

<em>The internal rate of return is the maximum cost of capital that can be used to appraise a project without cursing harm to the shareholders or investors.</em>

<em>The IRR produces a Net present value(NPV) of zero.</em>

The IRR can be determined using the formula below:

IRR = IRR = a%   +  (NPVa/NPVa + NPV b)×  (b-a)%

a%- lower discount rate.

b% - Higer discount rate

NPVa- NPV using lower discount rate

NPVb- NPV using higher discount rate

We use 7.6% and 50% as trial discount rates as follows:

NPV at 7.6%

PV of inflow = (1- 1.076^(-3)/0.076 ) ×  5.04

NPV = (1- 1.076^(-3) ×  5.04 - 8.01  =5.0728 million

NPV at 50%

PV of inflow = (1- 1.50^(-3)/0.5) ×  5.04

NPV =(1- 1.50^(-3)/0.5) ×  5.04 -  8.01 =  -0.91666

IRR = a%   +  (NPVa/NPVa + NPV b)×  (b-a)%

     = 7.6% +  (5.0728/(5.0728 + 0.91666)) × (50-7.6)%

     = 43.51%

IRR = 43.51%

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Advantages of Studying in Groups

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Studying in groups allows students to share their different thoughts with one another. This notion usually leads to a better learning process, since brainstorming generates new ideas and thus, students learn the same thing but with different perspectives. Open discussion enhances thinking skills and will give you access to others information and as a result, broadens your mind.

2. Clarification Discussions

Students are different and they perceive the same information differently. You can always ask your study mate to clarify a vague point for you and vice versa. Also, this action increases retention and reinforces the ideas, because the more the information is repeated the stronger the memory will be.

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Group studying is the best procrastination solution as it breaks the monotonous learning process and it makes you attentive to what the others are saying. Mock tests and trial quizzes assist those struggling with course materials and those extracting tests and quizzes from them as well.

Disadvantages of Studying in Groups

1. Distraction

The benefits of group studies are a lot but there are also some cons to group studying. You may find it tiresome to stay focused when studying in a group. Sometimes the conversation shifts from studying to trendy events maximizing distraction. Studying alone might be helpful if you need undivided attention to the materials at hand.

2. Lack of Efficiency

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3. Impersonalized Learning

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