ABC Company is considering a new project with information as belows: - Initial investment is equivalent...

  

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ABC Company is considering a new project with information as belows: - Initial investment is equivalent to ID student (unit: billion VND) - Firm is executed free tax for the first two years, since the third year, firm has to pay tax rate is 25% per year. - Fixed asset is applied straight line method within 5 years with the residual value is 0 billion VND, liquidation of this asset is 200 billion VND and is recorded as other income. - Sale, expense and working capital as follows: Year Initial cost Sale Operating expense Fixed expense Other income Working capital demand 0 ID student 1 2 500,000 3 2,500,000 3,000,000 4,000,000 Assume the interest rate is 12% per year. a. Compute the cash flow of this project b. Compute the NPV, IRR c. Should the firm invest this project? Explain Unit: billion VND 4 2,000,000 2,500,000 3,000,000 1,700,000 2,000,000 200,000 200,000 200,000 200,000 200,000 5 4,500,000 5,000,000 600,000 500,000 800,000 200,000 ABC Company is considering a new project with information as belows: - Initial investment is equivalent to ID student (unit: billion VND) - Firm is executed free tax for the first two years, since the third year, firm has to pay tax rate is 25% per year. - Fixed asset is applied straight line method within 5 years with the residual value is 0 billion VND, liquidation of this asset is 200 billion VND and is recorded as other income. - Sale, expense and working capital as follows: Year Initial cost Sale Operating expense Fixed expense Other income Working capital demand 0 ID student 1 2 500,000 3 2,500,000 3,000,000 4,000,000 Assume the interest rate is 12% per year. a. Compute the cash flow of this project b. Compute the NPV, IRR c. Should the firm invest this project? Explain Unit: billion VND 4 2,000,000 2,500,000 3,000,000 1,700,000 2,000,000 200,000 200,000 200,000 200,000 200,000 5 4,500,000 5,000,000 600,000 500,000 800,000 200,000 ABC Company is considering a new project with information as belows: - Initial investment is equivalent to ID student (unit: billion VND) - Firm is executed free tax for the first two years, since the third year, firm has to pay tax rate is 25% per year. - Fixed asset is applied straight line method within 5 years with the residual value is 0 billion VND, liquidation of this asset is 200 billion VND and is recorded as other income. - Sale, expense and working capital as follows: Year Initial cost Sale Operating expense Fixed expense Other income Working capital demand 0 ID student 1 2 500,000 3 2,500,000 3,000,000 4,000,000 Assume the interest rate is 12% per year. a. Compute the cash flow of this project b. Compute the NPV, IRR c. Should the firm invest this project? Explain Unit: billion VND 4 2,000,000 2,500,000 3,000,000 1,700,000 2,000,000 200,000 200,000 200,000 200,000 200,000 5 4,500,000 5,000,000 600,000 500,000 800,000 200,000 ABC Company is considering a new project with information as belows: - Initial investment is equivalent to ID student (unit: billion VND) - Firm is executed free tax for the first two years, since the third year, firm has to pay tax rate is 25% per year. - Fixed asset is applied straight line method within 5 years with the residual value is 0 billion VND, liquidation of this asset is 200 billion VND and is recorded as other income. - Sale, expense and working capital as follows: Year Initial cost Sale Operating expense Fixed expense Other income Working capital demand 0 ID student 1 2 500,000 3 2,500,000 3,000,000 4,000,000 Assume the interest rate is 12% per year. a. Compute the cash flow of this project b. Compute the NPV, IRR c. Should the firm invest this project? Explain Unit: billion VND 4 2,000,000 2,500,000 3,000,000 1,700,000 2,000,000 200,000 200,000 200,000 200,000 200,000 5 4,500,000 5,000,000 600,000 500,000 800,000 200,000

Answer rating: 100% (QA)

Solution a Cash flow of the project Year 0 Initial investment 1000000 Cash outflow 1000000 Year 1 Sa... View the full answer