Oak enterprises accepts projects earning more than the firms 11% cost of capital
ID: 2715460 • Letter: O
Question
Oak enterprises accepts projects earning more than the firms 11% cost of capital. Oak is currently considering a 13 year project that provides annual cash inflows of 45,000 and requires an initial investment of 389,100( all amts are after taxes) 1) the projects IRR is ....% ( round to two decimal places) 2) is this project acceptable? Yes or no 3) assuming that the cash inflows continue to 45000 per year , the number of additional years the flows would have to continue to make the project acceptable at the 11% discount rate is ..... additional years 4) with the given life, initial investment and cost of capital , the minimum annual cash inflow that the firm should accept is .....( round to nearest cent) Oak enterprises accepts projects earning more than the firms 11% cost of capital. Oak is currently considering a 13 year project that provides annual cash inflows of 45,000 and requires an initial investment of 389,100( all amts are after taxes) 1) the projects IRR is ....% ( round to two decimal places) 2) is this project acceptable? Yes or no 3) assuming that the cash inflows continue to 45000 per year , the number of additional years the flows would have to continue to make the project acceptable at the 11% discount rate is ..... additional years 4) with the given life, initial investment and cost of capital , the minimum annual cash inflow that the firm should accept is .....( round to nearest cent) 1) the projects IRR is ....% ( round to two decimal places) 2) is this project acceptable? Yes or no 3) assuming that the cash inflows continue to 45000 per year , the number of additional years the flows would have to continue to make the project acceptable at the 11% discount rate is ..... additional years 4) with the given life, initial investment and cost of capital , the minimum annual cash inflow that the firm should accept is .....( round to nearest cent)Explanation / Answer
1.The projects IRR is 38.25 %
2.yes it is profitable acceptable.
3.The cash inflows continue to 45000 per year , the number of additional years the flows would have to continue to make the project acceptable at the 11% discount rate is ....9. additional years.
4.with the given life, initial investment and cost of capital , the minimum annual cash inflow that the firm should accept is ..250.89...( round to nearest cent.
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