Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. ironex inc. is considering investing in a new comp

IronEx Inc. is considering investing in a new component that requires a $100,000 investment, as...

80.2K

Verified Solution

Question

Accounting

IronEx Inc. is considering investing in a new component that requires a $100,000 investment, as well as additional net working capital. The investment is expected to provide cash flows over the next five years. The anticipated project free cash flows for the investment are found in the table below:

image

Year 2016 2014 2015 2017 2018 2019 Net Operating Income Less: Taxes NOPAT OPlus: Depreciation Less: CAPEX Less: Increase in net working capital Project Free Cash Flow 20 000.00 22 000.00 24 100.00 26 305.00 28 620.25 -6 000.00 -6600.00 -7230.00 -7 891.50 -8 586.08 14 000.00 15 400.00 16 870.00 18 413.50 20 034.18 20 000.00 20 000.00 20 000.00 20 000.00 20 000.000 0.00 0.00 0.00 0.00 0.00 -250.00 -262.50 -275.63 -289.41 6 077.53 33 750.00 35 137.50 36 594.38 38 124.09 46 111.71 -100 000.00 -5 000.00 - 105 000.00 Invested Capital (beginning of year) 105 000.00 85 250.00 65512.50 45 788.13 26077.54 205 000.00 The project cost of capital is 9%. a) Calculate the project's annual economic profit (EVA) using the NOPAT and invested capital figures found in the table. b) Show that the project's net present value (NPV) equals the present value of the total economic profit

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Biology
1.2K views

Question: explain how nerve impulses are transmitted, describe Na-K pump, the role of ATP, calcium and...

Chemistry
1.2K views

Give me two reasons for deviations from Beers’ law that would cause a nonlinear relationship between absorbance...

Psychology
1.2K views

Philosophy related. I need assistance in writing a one page essay. Answering the following information. Philosophy question...

Biology
1.2K views

Why did the 13 colonies revolt against England 1 England taxed them for all printed...

Biology
1.2K views

SpongeBob SquarePants recently met SpongeSusie Roundpants at a dance. SpongeBob is heterozygous for his square...

Physics
1.2K views

5 An unruly demonstrator lifts a stone of mass 200 from the ground and throws...

Geometry
1.2K views

5 Use the graph of 2 z below to answer the following questions d Solve...

Calculus
1.2K views

Find mZF in rhombus DEFG E D U 51 3u 29 F G

Calculus
1.2K views

The total cost in dollars of manufacturing x auto body frames is C x 40...

Calculus
1.2K views

Differentiate the function y etan 8 y

Accounting
1.2K views

Give at least ten research topics related to accounting. Thank you so much!

Accounting
1.2K views

Explain and discuss the criteria that guide firms in recognition of revenue. What does each...