Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your factory has beon offered a contract to produce a part for a new printer. The contract would last for 3 years and your cast

image text in transcribed
image text in transcribed
Your factory has beon offered a contract to produce a part for a new printer. The contract would last for 3 years and your cast flows from the contract would be $497 million per jear. Your uplronh sebup costs to be resdy to produce the part would be $8.16 malion. Your discount rate for this contract is 8.1%. a. What is the IRR? a. What is the IRR? The IRR is 6. (Round to two decirral placen) b. The NPV is $4.63 million, wtich is postive so the NPV nule says to accept the progect Does the IRR nile agree with the NPV nule? The IRR rule with the NPV ruie (Select from the drop-down metru.) You have been offered a urique investment opponunty. if you invest $10,400 today, you wit recelve $520 one year from now, $1,560 two years from now, and $10,400 ten yeans fom now. a. What is the NPV of the epponuniy if the cost of capitai is 5.4% per year? should you tsike the opportinity? b. What is the NPV of the opportunify if the cont of capes is 1.4K per year? Should you take it now? 2. What is the NPV of the opportunity if the cost of capital is 5.4% per year? If the cost of capital is 5.4% per yeat, the NPV is 5 (Pound to the nearest cent.) Should you take the epportunity? You take this opportunity. (Select from the dopp-down menu) b. What is tha NPVV of the oppoctuniny if the cost of captat is 14 s, per year? If the cost of capeal is 1.4W per year, the NPV in s (Round to the nearest cent.) Should you take at row? You

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

Foundations Of Financial Management

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen

18th Edition

126409762X, 9781264097623

More Books

Students also viewed these Finance questions