Question

Jella Cosmetics is considering a project that costs $800,000 and is expected to last for 10...

Jella Cosmetics is considering a project that costs $800,000 and is expected to last for 10 years and produce future cash flows of

?$175,000 per year. If the appropriate discount rate for this project is 16 percent, what is the? project's IRR?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Project’s Internal Rate of Return = 17.53% or 18% [Rounded to nearest whole number]

Internal Rate of Return Factor         

= Initial Investment / Net annual cash inflow

= $800,000 / 175,000

= 4.571428

From the Present Value Annuity Factor Table [PVIFA], We can find that the discount rate (IRR) corresponding to the factor of 4.571428 for 10 Years is approximately equals to 17.53%

Therefore, Project’s Internal Rate of Return[IRR] = 17.53% or 18% [Rounded to nearest whole number]

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
IRR calculation)  Jella Cosmetics is considering a project that costs $725,000 and is expected to last...
IRR calculation)  Jella Cosmetics is considering a project that costs $725,000 and is expected to last for 9 years and produce future cash flows of $200,000 per year. If the appropriate discount rate for this project is 24 ​percent, what is the​ project's IRR? The​ project's IRR is nothing​%
​(IRR calculation)  Jella Cosmetics is considering a project that costs ​$825,000 and is expected to last...
​(IRR calculation)  Jella Cosmetics is considering a project that costs ​$825,000 and is expected to last for 8 years and produce future cash flows of ​$180,000 per year. If the appropriate discount rate for this project is 15 ​percent, what is the​ project's IRR? The​ project's IRR is _____%.  ​(Round to two decimal​ places.)   
The capital budgeting director of Sparrow Corporation is evaluating a project which costs $250,000, is expected...
The capital budgeting director of Sparrow Corporation is evaluating a project which costs $250,000, is expected to last for 10 years and produce after-tax cash flows, including depreciation, of $44,503 per year. If the firm's required rate of return is 14 percent and its tax rate is 40 percent, what is the project's IRR (answer in percent)? 8% 12% 14% 5% 18%
Gio's Restaurants is considering a project with the following expected cash? flows: Year Project Cash Flow?...
Gio's Restaurants is considering a project with the following expected cash? flows: Year Project Cash Flow? (millions) 0 ?$(210?) 1 100 2 72 3 100 4 90 If the? project's appropriate discount rate is 11percent, what is the? project's discounted payback? period? The? project's discounted payback period is ____ years? Round to 2 decimal places
East Coast Television is considering a project with an initial outlay of​ $X (you will have...
East Coast Television is considering a project with an initial outlay of​ $X (you will have to determine this​ amount). It is expected that the project will produce a positive cash flow of $55,000 a year at the end of each year for the next 14 years. The appropriate discount rate for this project is 11 percent. If the project has an internal rate of return of 14 ​percent, what is the​ project's net present​ value? 1. If the project...
(Payback ​period, NPV,​ PI, and IRR calculations​) You are considering a project with an initial cash...
(Payback ​period, NPV,​ PI, and IRR calculations​) You are considering a project with an initial cash outlay of ​$75,000 and expected free cash flows of ​$26,000 at the end of each year for 5 years. The required rate of return for this project is 7 percent. a. What is the​ project's payback​ period? b. What is the​ project's NPV​? c. What is the​ project's PI​? d. What is the​ project's IRR​?
 East Coast Television is considering a project with an initial outlay of​ $X (you will have...
 East Coast Television is considering a project with an initial outlay of​ $X (you will have to determine this​ amount). It is expected that the project will produce a positive cash flow of ​$43000 a year at the end of each year for the next 14 years. The appropriate discount rate for this project is 7 percent. If the project has an internal rate of return of 9 ​percent, what is the​ project's net present​ value? a.  If the project...
PROBLEM 2 Winston Clinic is evaluating a project that costs $52,125 and has expected net cash...
PROBLEM 2 Winston Clinic is evaluating a project that costs $52,125 and has expected net cash flows of $12,000 per year for eight years. The first inflow occurs one year after the cost outflow, and the project has a cost of capital of 12 percent. a. What is the project's payback? b. What is the project's NPV? Its IRR? c. Is the project financially acceptable? Explain your answer.
(A) A company is considering a major expansion of its product line. The initial outlay would...
(A) A company is considering a major expansion of its product line. The initial outlay would be $10,100,000 and the project would generate cash flows of $1,290,000 per year for 20 years. The appropriate discount rate is 10%. (a) calculate the NPV (b) calculate the PI (c) calculate the IRR (d) should this project be excepted? (B) The same company is considering a new system for its lot. The system will provide annual labor savings and reduced waste totaling $175,000...
Corner Restaurant is considering a project with an initial cost of $211,600. The project will not...
Corner Restaurant is considering a project with an initial cost of $211,600. The project will not produce any cash flows for the first three years. Starting in Year 4, the project will produce cash inflows of $151,000 a year for five years. This project is risky, so the firm has assigned it a discount rate of 18.6 percent. What is the project's net present value? A) -$46,028.92 B) $39,487.15 C) -$38,399.55 D) $67,653.02 E) $18,715.97
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT