A company wants to analyze this investment: initial investmentof $80.000.000, $30.000 of income in the first year
Question:
A company wants to analyze this investment: initial investmentof $80.000.000, $30.000 of income in the first year then 10% increase over previous year's revenue for 5 years, residual value of $20.000 and opportunity rate of6%.
a) Is it feasible to carry out the investment? Why?
b) if the company only accepts investments that generate a return of 5% above the cost of the investment. Should we accept this project?
c. What would the initial deposit be if you expect a 50% return
d. Calculate the IRR for this project Postdata: the residual value is added to the net cash flow of the last year, this being the numerator of the last term
Intermediate Accounting Volume 2
ISBN: 9781260881240
8th Edition
Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel