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Especially, could you explain how to calculate NPV if it's 15 percent return? A project has the following revenues and costs (all figures in 000s):
Especially, could you explain how to calculate NPV if it's 15 percent return?
A project has the following revenues and costs (all figures in 000s): Year 1 2 3 4 Revenues 100 310 400 400 Cost 80 150 200 200 Depreciation 80 80 80 80 Operating Profit -60 80 120 120 All the project's revenues correspond to cash sales, and the firm pays all costs, excluding depreciation, in cash. The initial outlay on the project is 320,000. There are no further consequences of taking on the project. Ignore tax. What is the project's accounting rate of return? If the company currently earns a 30% ARR on existing business and does not want to see this reduced, what decision would it make? If the market requires a 15% return on this project, calculate the project's NPV. Should the firm accept the project? Why? 20 A project has the following revenues and costs (all figures in 000s): Year 1 2 3 4 Revenues 100 310 400 400 Cost 80 150 200 200 Depreciation 80 80 80 80 Operating Profit -60 80 120 120 All the project's revenues correspond to cash sales, and the firm pays all costs, excluding depreciation, in cash. The initial outlay on the project is 320,000. There are no further consequences of taking on the project. Ignore tax. What is the project's accounting rate of return? If the company currently earns a 30% ARR on existing business and does not want to see this reduced, what decision would it make? If the market requires a 15% return on this project, calculate the project's NPV. Should the firm accept the project? Why? 20Step by Step Solution
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