Viera Corporation is considering investing in a new facility. The estimated cost
ID: 2489300 • Letter: V
Question
Viera Corporation is considering investing in a new facility. The estimated cost of the facility is $2,001,718. It will be used for 12 years, then sold for $716,270. The facility will generate annual cash inflows of $399,840 and will need new annual cash outflows of $155,900. The company has a required rate of return of 7%.
Click here to view the factor table.
(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
Calculate the internal rate of return. (Round answer to 0 decimal place, e.g. 15%.)
Whether the project should be accepted.
should/should not
be accepted
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Compute the cash payback period for the new hoist
Cash payback period ____________________years
Compute the annual rate of return for the new hoist______________________%
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Internal rate of return is %Explanation / Answer
Company Should accept the project due to net cash Inflow of $253853
Calculation of IRR
Year Cash Flow PV Factor @ 7% Net Present Value Of Cash flow 0 -$2001718 1 -$2001718 1 $243940 0.93458 $227981 2 $243940 0.87344 $213067 3 $243940 0.81630 $199128 4 $243940 0.76290 $186101 5 $243940 0.71299 $173926 6 $243940 0.66634 $162548 7 $243940 0.62275 $151914 8 $243940 0.58201 $141975 9 $243940 0.54393 $132687 10 $243940 0.50835 $124007 11 $243940 0.47509 $115894 12 $243940 0.44401 $108312 12 $716270 0.44401 $318032 Total $253853Related Questions
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