Question

Lithium, Inc. is considering projects A. Project A costs $95,000 and is expected to generate $65,000...

Lithium, Inc. is considering projects A. Project A costs $95,000 and is expected to generate $65,000 in year one and $75,000 in year two. Lithium, Inc.'s required rate of return for these projects is 10%. The internal rate of return for Project A is

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Correct Answer: IRR for project A is 29.42 %

Calculation:

Also, IRR is greater than the required return of the project which is 10 %.Therefore, the project can be accepted.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Lithium, Inc. is considering two mutually exclusive projects, A and B. Project A costs $95,000 and...
Lithium, Inc. is considering two mutually exclusive projects, A and B. Project A costs $95,000 and is expected to generate $65,000 in year one and $75,000 in year two. Project B costs $120,000 and is expected to generate $64,000 in year one, $67,000 in year two, $56,000 in year three, and $45,000 in year four. The firm's required rate of return for these projects is 10%. Calculate the net present value for Project A and B
Platinum, Inc. is considering two mutually exclusive projects, X and Y. Project X costs $95,000 today...
Platinum, Inc. is considering two mutually exclusive projects, X and Y. Project X costs $95,000 today and is expected to generate $65,000 in year one and $75,000 in year two. Project Y costs $120,000 and is expected to generate $64,000 in year one, $67,000 in year two, $56,000 in year three, and $45,000 in year four. The firm's investors require a rate of return of 15% and the weighted average cost of capital is 12%. What is the equivalent annual...
The Beetroot Corporation is considering two MUTUALLY EXCLUSIVE projects, Project A and Project B. The required...
The Beetroot Corporation is considering two MUTUALLY EXCLUSIVE projects, Project A and Project B. The required rate of return is 10%. Project A costs $95,000 and will generate $65,000 in Year 1 and $75,000 in Year 2. Project B costs $120,000 and will generate $64,000 in Year 1, then $67,000 in Year 2, $56,000 in Year 3, and $45,000 in Year 4. The PROFITABILITY INDEX for Project B is: Select one: a. 1.33 b. 1.48 c. 1.39 d. 1.55
You are considering a new project that will cost $750,000. The project is expected to generate...
You are considering a new project that will cost $750,000. The project is expected to generate positive cash flows over the next four years in the amounts of $350,000 in year one, $325,000 in year two, $250,000 in year three, and $280,000 in year four. Your required rate of return is 8%. What is the discounted payback period of the project?
You are evaluating a capital budgeting project that costs $25,000 and is expected to generate cash...
You are evaluating a capital budgeting project that costs $25,000 and is expected to generate cash flows equal to $10,000 per year for four years. The required rate of return is 10 percent. Compute the project’s (a) net present value, (b) profitability index, and (c) internal rate of return. (d) Should the project be purchased?
USA Inc is considering a new 10-year project that will generate additional sales revenue of $200,000...
USA Inc is considering a new 10-year project that will generate additional sales revenue of $200,000 per year. The associated costs are $120,000 per year. The required rate of return for the project is 12%. The tax rate is 40%. What is the present value of the after-tax operating cash flows? a. $250,374 b. $271,211 c. $417,289 d. $452,018
Dorati Inc. is considering two mutually exclusive projects.  Dorati used a 15% required rate of return to...
Dorati Inc. is considering two mutually exclusive projects.  Dorati used a 15% required rate of return to evaluate capital expenditure projects.  If the two projects have the costs and cash flows shown below, determine the NPV for each. Year                             Project S                                   Project T    0                                -$70,000                                   -$100,000    1                                  $50,000                                      $60,000    2                                  $60,000                                      $70,000    3                                                                                    $80,000                        4                                                                                    $90,000
Tempura Inc. is considering two projects. Project A requires an investment of $50,000. Estimated annual receipts...
Tempura Inc. is considering two projects. Project A requires an investment of $50,000. Estimated annual receipts for 20 years are $20,000; estimated annual costs are $12,500. An alternative project, B, required an investment of $75,000, has annual receipts for 20 years of $28,000, and has annual costs of $18,000. Assume both projects have a zero salvage value and that MARR is 12%/year. Please show cash flow diagram and please don't use excel functions. Thank you! a. What is the present...
Jackson's Autos (JA) is evaluating a capital budgeting project that costs $565,000. The project will generate...
Jackson's Autos (JA) is evaluating a capital budgeting project that costs $565,000. The project will generate $100,000 per year for the next 10 years. JA's required rate of return is 11 percent. What is the project's internal rate of return (IRR)? a. 5.9% b. 17.7% c. 11.0% d. none of the above
A company is considering a new project that will cost $750,000. The project is expected to...
A company is considering a new project that will cost $750,000. The project is expected to generate positive cash flows over the next four years in the amounts of $300,000 in year one, $325,000 in year two, $150,000 in year three, and $180,000 in year four. The required rate of return is 8%. What is the project’s payback period? 2.60 years 2.83 years 2.63 years 2.33 years 2.50 years
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT