Question
Diltz Farms is considering investing in an automated egg-sorting system to increase production for international (web-based) sales of Diltz Farms' products. The new system will
Diltz Farms is considering investing in an automated egg-sorting system to increase production for international (web-based) sales of Diltz Farms' products. The new system will cost $2993 including installation. It will be fully depreciated in 5 yrs.(straight-line) to zero and generate $279 after-tax gain at the end of the projected period (year 6). The initial working captital will be $303 and will be $616 in year one and increase each year thereafter by 5 percent.Assume that at year 0, there is no change in working capital. Revenues generated from the egg-sorter are expected to be $1117 in year one, and increase by five percent each year. Expenses are ten percent of revenues. Diltz Farms' cost of capital is 8.2%. Using the discounted cash-flow analysis, should Diltz Farms invest in the machinery? What is the IRR Asume Tax rate as 35%
I NEED TO FIND THE IRR AND SEE A FORMULA SO I CAN UNDERSTAND HOW TO DO IT
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