managerial finance problem

Project Description:

is anyone interested in helping me with this problem. i need it in 12 hours. $20

mills mining is considering an expansion project. to date it has spent $75,000 investigating the viability of the project and has decided to proceed further. the proposed project will cost $500,000 in addition to the $75,000 that was spent on the feasibility study. the project will be depreciated over a 3 year macrs class life.



year rates

1 0.33

2 0.45

3 0.15

4 0.07

if the project is undertaken the company will need to increase its inventories by $50,000, and its accounts payable will rise by $10,000. the company will realize an additional $600,000 in sales over each of the next four years. the company’s operating costs (not including depreciation) will increase by $400,000 a year. the company’s tax rate is 40%. at t = 3, the project’s economic life is complete, but it will have a salvage value (before-tax) of $50,000 after three years. the project’s wacc is 10%.

a) what is the project’s net present value (npv)? what is the irr?

b) should the project be accepted? why or why not? (i.e. explain what your numerical answer means.)

must be done in excel file or word document with solutions to the answers/how arrived at answer.

also attached.
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