Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Ursus, Inc., Is consldering a project that would have a ten-year life and would require a $5,408,000 Investment In equlpment. At the end of ten
Ursus, Inc., Is consldering a project that would have a ten-year life and would require a $5,408,000 Investment In equlpment. 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 (Ignore Income taxes. Sales Variable expenses Contribution margin Fixed expenses: $3,78e,803 2,208,880 1,500 , Fixed out-of-pocket cash expenses Depreciation $468,808 548,888 1,808,888 $ 499,280 Net operating income Click here to view Exhibit 12B-1 and Exhlibit 12B-2, to determine the approprlate discount factors) using the tables provided. All of the above items, except for depreciation, represent cash flows. The company's required rate of return is 11%. Required: a. Compute the project's net present value. (Round your intermedlate calculations and final answer to the nearest whole dollar amount.) b. Compute the project's Internal rate of return. (Round your final answer to the nearest whole percent) c. Compute the project's payback perlod. (Round your answer to 2 decimal places.) d. Compute the project's simple rate of return. (Round your final answer to the nearest whole percent) a. Net present value b. Internal rate of return c. Payback period d. Simple rate of return
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