Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Invigor Natural Snacks is contemplating an expunon The financeing buying a second machine was 8.000 and 7 on with deathe end of the weathe Increase

image text in transcribed
image text in transcribed
Invigor Natural Snacks is contemplating an expunon The financeing buying a second machine was 8.000 and 7 on with deathe end of the weathe Increase in cash revenues from the expansion of 50 500 per with such as of 10.000 niger's cool 10%, and the company antecas Prosent Value of Presentable Value of the most Read the com Requirement 1. Calculate the present value and Wearate of return for this event Begin by calculating the net present value of the investment (Round infomeday calculations there whole dolar. Use todos los dedoces XXX and under the breed nearest whole dollar Use a missioprotheses for a negativne present value The net present vois 1. Calculate the net present value and internal rate of return for this investment 2. Assume the finance manager of Invigor is unsure about the cash revenues and costs. The revenues could be anywhere from 10% higher to 10% lower than predicted. Assume cash costs are still $18,000 per year. What are NPV and IRR at the high and low points for revenue? 3. The finance manager thinks that costs will vary with revenues, and if the revenues are 10% higher, the costs will be 7% higher. If the revenues are 10% lower, the cosis will be 10% lower. Recalculate the NPV and IRR at the high and low revenue points with this new cost information. 4. The finance manager has decided that the company should earn 2% more than the cost of capital on any project. Recalculate the original NPV in requirement 1 using the new discount rate and evaluate the investment opportunity 5. Discuss how the changes in assumptions have affected the decision to expand

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

Auditing And Assurance Services With ACL CD

Authors: McGraw Hill

1st Edition

1259071200, 978-1259071201

More Books

Students also viewed these Accounting questions

Question

1. Why do people tell lies on their CVs?

Answered: 1 week ago

Question

2. What is the difference between an embellishment and a lie?

Answered: 1 week ago