Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assignment 4 Capital Budgeting IBL Project IBL is a company which is growing very fast and is undertaking many projects. Below is the financial information

image text in transcribed
Assignment 4 Capital Budgeting IBL Project IBL is a company which is growing very fast and is undertaking many projects. Below is the financial information concerning a project which the management accounting department has to study and make a decision whether to accept or to reject. Capex $27000 Project period 6 years Revenue $9,500 Supplies expense 800 Salary Expense 3500 Utilities Expense 1,200 Discount Rate 9% Sale of asset @ end of project $6,000 Net working Capital $4,500 The company's tax rate is 30%. The project also earned $1,500 as rent revenue. The capital expenditure is depreciated using straight line method over the project and will have a residual value of $6000. the company will have to pay $650 for maintenance cost. REQUIRED a) Calculate the initial investment b) Calculate each year cash flow c) Calculate the terminal value of the asset used d) Calculate the NPV e) Calculate the Profitability Index [PI]

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Contabilidad Para No Contadores

Authors: Wayne Label

2nd Edition

9587712986, 9789587712988

More Books

Students also viewed these Accounting questions

Question

=+ Where, how, why, and when are the products to be bought abroad?

Answered: 1 week ago