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follow the format shown in exhibit 12b.1 and exhibit 12b.2 as you complete the requirements below. each of the following scenarios is independent. assume that all cash flows are after-tax cash flows. cuenca company is considering the purchase of new equipment that will speed up the process for producing flash drives. the equipment will cost $7,200,000 and have a life of 5 years with no expected salvage value. the expected cash flows associated with the project follow: year cash revenues cash expenses 1 $8,000,000 $6,000,000 2 8,000,000 6,000,000 3 8,000,000 6,000,000 4 8,000,000 6,000,000 5 8,000,000 6,000,000 kathy shorts is evaluating an investment in an information system that will save $240,000 per year. she estimates that the system will last 10 years. the system will cost $1,248,000. her company's cost of capital is 10%. elmo enterprises just announced that a new plant would be built in helper, utah. elmo told its stockholders that the plant has an expected life of 15 years and an expected irr equal to 25%. the cost of building the plant is expected to be $2,880,000. required: 1. calculate the irr for cuenca company. the company's cost of capital is 16%. round your answer to the nearest percent. fill in the blank 1 % should the new equipment be purchased? 2. calculate kathy short's irr. round your answer to the nearest percent. fill in the blank 3 % should she acquire the new system? 3. what should be elmo enterprises' expected annual cash flow from the plant? round your answer to the nearest dollar. $fill in the blank 5 check my work

Sagot :

Using a financial calculator, the IRR may be found to be 12%. The calculations for NPV and IRR use the same formula.

What is the Internal rate ratio?

Financial analysts use the statistic known as the internal rate of return (IRR) to evaluate the profitability of potential investments. In a discounted cash flow analysis, the IRR is the discount rate that reduces all cash streams' net present values (NPV) to zero.

Keep in mind that the IRR does not accurately reflect the project's true financial value. When utilizing the IRR tool in Excel, calculating the IRR is easy. Excel does all the necessary work and calculates the specified discount rate for you.

Cash flows of the project

Cash flow in year 0 = $-7,200,000

Cash flow in year 1 = $8,000,000 - $6,000,000 = $2 million

Cash flow in year 2 = $8,000,000 - $6,000,000 = $2 million

Cash flow in year 3 = $8,000,000 - $6,000,000 = $2 million

Cash flow in year 4 = $8,000,000 - $6,000,000 = $2 million

Cash flow in year 5 = $8,000,000 - $6,000,000 = $2 million

Using a financial calculator, the IRR may be found to be 12%.

To know more about the Internal rate ratio: https://brainly.com/question/28581735

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