Assume Polaris invested $2.12 million to expand its manufacturing capacity. Assu

Question

Assume Polaris invested $2.12 million to expand its manufacturing capacity. Assume that these projects have a ten-year life and that management requires a 10% internal rate of return on these assets. What is the amount of annual cash flows that Polaris must earn from these projects to have a 10% internal rate of return? (Hint: Identify the ten-period, 10% factor from the present value of an annuity table, and then divide $2.12 million by the factor to get the annual required cash flows.) Assess Polariss most recent annual financial statements, from its website (polaris.com) or the SECs website (sec.gov). a. Determine the amount that Polaris invested in capital assets for that year. (Hint: Refer to the statement of cash flows.) b. Assume a ten-year life and a 10% internal rate of return. What is the amount of cash flows that Polaris must earn on these new projects?

Explanation / Answer

Amount of annual cash flow = Amount invested / annuity factor present value 10%

Amount invested = $2.12 million

Annuity factor present value for i 10 , n 10= 6.14457

Amount of annual cash flow = $2,120,000 / 6.14457 = $345,020

Please provide the cash flow statement and other information for remaining part

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