Wildhorse Computer Devices Inc. is considering the introduction of a new printer. The company's accountant had prepared an analysis computing the target unit cost but misplaced his working papers. From memory he remembers the estimated unit sales price was $244 and the target unit cost was $236. Sales were projected at 100,000 units with a required $5,000,000 investment.
Compute the required minimum rate of return.
Minimum rate of return
Thunder Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $204,969 and have an estimated useful life of 12 years. It can be sold for $69,200 at the end of that time. (Amusement parks need to rotate exhibits to keep people interested.) It is expected to increase net annual cash flows by $26,300. The company's borrowing rate is 8%. Its cost of capital is 10%.
Click here to view the factor table.
Calculate the net present value of this project to the company and determine whether the project is acceptable. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round present value answer to 0 decimal places, e.g. 125.)