Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

How do i get these answers? Need help. Thank you. Will make sure to thumbs up. Data table Cost of new plant and equipment: $14,400,000

image text in transcribed
image text in transcribed
How do i get these answers? Need help. Thank you. Will make sure to thumbs up.
Data table Cost of new plant and equipment: $14,400,000 Shipping and installation costs: $210,000 Unit sales: (Related to Checkpoint 12.1) (Comprehensive problem-calculating project cash flows, NPV, PI, and IRR) Traid Winds Corporation, a firm in the 31 percent marginal tax bracket with a required rate of return or discount rate of 13 percent, is considering a new project. This project involves the introduction of a new product. The project is expected to last 5 years and then, because this is somewhat of a fad product, it will be terminated. Given the following information, , determine the free cash flows associated with the project, the project's net present value, the profitability index, and the internal rate of return. Apply the appropriate decision criteria. a. Determine the free cash flows associated with the project. The FCF in year 0 is $ (Round to the nearest dollar.) The FCF in year 1 is $ (Round to the nearest dollar.) The FCF in year 2 is $ (Round to the nearest dollar.) The FCF in year 3 is $ (Round to the nearest dollar.) The FCF in year 4 is $11,512,320. (Round to the nearest dollar.) The FCF in year 5 is $9,929,820. (Round to the nearest dollar.) b. The net present value (NPV) of the project is $22,481,226. (Round to the nearest dollar.) c. The profitability index (PI) of the project is 2.517 . (Round to three decimal places.) d. The internal rate of return (IRR) of the project is 60.21%. (Round to two decimal places.) e. Should Traid accept this new project? (Select the best choice below.) A. No. The project should be rejected because its NPV is negative, the PI is less than one, and the IRR is less than the required rate of return, 13%. B. Yes. The project should be accepted because its NPV is positive, the PI is less than one, and the IRR is less than the required rate of return, 13%. C. Yes. The project should be accepted because its NPV is positive, the PI is greater than one, and the IRR is greater than the required rate of return, 13%. D. More information is needed to make this decision

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_2

Step: 3

blur-text-image_3

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

Marketplace Lending Financial Analysis And The Future Of Credit Integration Profitability And Risk Management

Authors: Ioannis Akkizidis, Manuel Stagars

1st Edition

1119099161, 978-1119099161

More Books

Students also viewed these Finance questions

Question

State the uses of job description.

Answered: 1 week ago

Question

Explain in detail the different methods of performance appraisal .

Answered: 1 week ago

Question

identify current issues relating to equal pay in organisations

Answered: 1 week ago