Question: Singular Construction is calculating whether to build a new distribution

Singular Construction is calculating whether to build a new distribution facility. The proposal investment will cost Singular $ 4 million to construct and provide cash savings of $ 500,000 per year over the next ten years.
a. What rate of return does the investment offer?
b. If Singular were to invest another $ 200,000 in the facility at the end of five years, it would extend the life of the project by four years, during which time it would continue receiving cash savings of $ 500,000. What is the internal rate of return for this investment?

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  • CreatedNovember 13, 2015
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