Answered step by step
Verified Expert Solution
Question
1 Approved Answer
I know answers are given but need to know how to get them Tranter, Inc., is considering a project that would have a ten-year life
I know answers are given but need to know how to get them
Tranter, Inc., is considering a project that would have a ten-year life and would require a $1,200,000 investment in equipment. At the end of ten years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows: Sales... $1,700,000 Variable expenses 1.200.000 Contribution margin 500,000 Fixed expenses: Fixed out-of-pocket cash expenses........ $200,000 Depreciation... 120.000 320.000 Net operating income.. $ 180.000 Which All of the above items, except for depreciation, represent cash flows. The company's required rate of return is 12%. a. Compute the project's net present value. (Answer: $495,000 b. Compute the project's internal rate of return to the nearest whole percent. (Answer: 21 %) c. Compute the project's payback period. (Answer: 4 years) d. Compute the project's simple rate of return. (Answer: 15%)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