Assignment 2: Mid-Term Assignment: Accept or Reject the Project

Affordable Essays
Assignment 2: Mid-Term Assignment: Accept or Reject the Project
In this assignment, you will undertake calculations in order to evaluate a project, and decide if it should be accepted or rejected.
Texas Roks, Inc. is considering a new quarry machine. The costs and revenues associated with the machine have been provided to you for analysis:
Cost of the new project
$4,000,000
Installation costs
$100,000
Estimated unit sales in year 1
50,000
Estimated unit sales in year 2
75,000
Estimated unit sales in year 3
40,000
Estimated sales price in year 1
$150
Estimated sales price in year 2
$175
Estimated sales price in year 3
$160
Variable cost per unit
$120
Annual fixed cost
$50,000
Additional working capital needed
$435,000
Depreciation method
3 years straight-line method, no salvage value
Texas Rok’s tax rate
40%
Texas Rok’s cost of capital
13%
Required:
Calculate operating cash flow and the change in net working capital.
Determine the NPV and IRR of the project.
Should the company accept or reject the project based on the NPV? Why?
Should the company accept or reject the project based on the IRR? Why?
What is your final accept or reject decision? Why?
What is the payback period for this project? Would this influence your decision to accept or reject?
Deliverables:
Submit your findings to the above questions in a Microsoft Word or Excel document to the W3: Assignment 2Dropboxby Tuesday, December 9, 2014. Use an Excel document to illustrate your calculations.
Name your document(s) SU_FIN3030_W3_A2 _LastName_FirstInitial.
Assignment 2 Grading Criteria Maximum Points
Correctly calculated the operating cash flow and the change in net working capital.
50
Correctly calculated the NPV
50
Correctly calculated the IRR. 50
Correctly calculated the payback period.
20
Made the correct accept/reject decision and explained why.
20
Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; displayed accurate spelling, grammar, and punctuation.
10
Total: 200
Finance homework help
With unimasteressays.com’s essay writing service, you can always rest easy knowing that when you say “write my essay”, you will get a superior quality plagiarism-free, professionally written paper. Just proceed and place an ORDER NOW.

Do You Need A Similar Assignment?

Place an order with us. Our skilled and experienced writers will deliver a custom paper which is not plagiarized within the deadline which you will specify.

Note; 6 Hours urgent orders deliver also available.

If you need more clarifications contact our support staff via the live chat for immediate response.

 

Type of paper Academic level Subject area
Number of pages Paper urgency Cost per page:
 Total: