Answer:
IRR = 14.96%
The project should be rejected, because the calculated internal rate of return falls short of the required return (14.96% < 16%).
Explanation:
The internal rate of return (IRR) is an essential calculation in capital budgeting for assessing potential investment profitability. The IRR rule guides whether to pursue a project or investment, stipulating that if the IRR exceeds the minimum required return, the project should be accepted. Conversely, if it’s lower than the cost of capital or the requisite return, the project should be turned down.
The formula used is as follows:
$0 = (initial investment x -1) + CF1 / (1 + IRR) ^ 1 + CF2 / (1 + IRR) ^ 2 +... + CFX / (1 + IRR) ^ X
Initial Investment = Total initial investment costs year x-1
CFx = Cash Flow during period X
IRR = Internal rate of return
Due to the nature of the IRR formula, it cannot be computed analytically; it must be derived through trial and error or via specialized software for IRR calculation.
In this instance:
IRR = -27200 + 11200 / (1 + IRR) ^ 1 + 14200 / (1 + IRR) ^ 2 + 10200 / (1 + IRR) ^ 3
IRR = 14.96%
The company should not proceed with the investment, as the calculated IRR is less than what is required (14.96% < 16%).
Result:
The amount he should pay equals = $270,000
Explanation:
The sum due for the investment represents the present value of net income, discounted at a 12% return rate.
The occupancy percentage = 100 - 5= 95%
The net income equals occupancy rate × total income - expenses
= 95%× 3,600× 12 - 8,640= 32400
<passuming this="" income="" continues="" indefinitely="" the="" present="" value="" of="" is="" calculated="" as="">
PV of net income = A/r
A = 32400, r = 12%
= 32400/0.12
=$270000
The amount he should pay equals = $270,000
</passuming>
Answer:
The overall fixed monthly manufacturing expense totals $328,000.
Explanation:
For a production of 4000 units, direct material costs amount to $99.2 per unit, direct labor costs stand at $45.5 per unit, and manufacturing overhead costs equal $94.
For a production of 5000 units, direct materials remain at $99.2 per unit, direct labor is $45.5, and manufacturing overhead costs adjust to $77.6.
Total overhead for 4,000 units
= 
= $376,000
Total overhead for 5,000 units
= 
= $388,000
The variable cost per unit
= 
= $12 per unit
Fixed costs
= Total expenses - Total variable costs
= 
= $328,000
I think the answer is: hiring employeesproducing items
distributing items
acquiring materials
A capital investment is mainly made to acquire and boost income, which is why significant amounts are commonly allocated to advertising, production, and distribution. Paying taxes and returning funds to investors occurs post-income, rather than upfront.
