Question
According to preliminary estimates, the installation of an industrial plant requires an initial investment of L3,000,000. The estimated selling price for the product is L15.00
According to preliminary estimates, the installation of an industrial plant requires an initial investment of L3,000,000. The estimated selling price for the product is L15.00 per unit. Projections have estimated the following behavior in the main financial variables:
|
|
|
| YEAR |
|
|
Details | Units | 1 | 2 | 3 | 4 | 5 |
sales | 1000 un. | 180 | 200 | 200 | 240 | 260 |
production costs | thousands L. | 750 | 800 | 850 | 900 | 950 |
Selling and adm. expenses | thousands L. | 300 | 330 | 360 | 390 | 420 |
financial costs | thousands L. | 100 | 95 | 90 | 85 | 80 |
income tax | thousands L. | 390 | 440 | 500 | 560 | 610 |
If the minimum acceptable rate of return for this project is set to 40%, should this be implemented? project based on this information? (Use internal rate of return as criteria)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started