MIRR VS. IRR Charles Beale Ashford University Business 650 Managerial Finance Professor Rick Kwan September 17‚ 2012 The Modified Internal Rate of Return is an underused measure for selection of projects that a company can choose because it is more effective at dealing effectively with periodic free cash flows that develop from the time that an asset is purchased through its life to the point where it is sold‚ ranking projects and variable rates of return through
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N04 HL P1 Q5 Payback Calculation Year Machine A $ Machine B $ 1 45‚000 25‚000 Part of 2 20‚000 (0.57 of 35‚000) 35‚000 Part of 3 - 25‚000 (0.45 of 55‚000) Investment 65‚000 85‚000 1 + 0.57 = 1.57 (Machine A has payback period of 1.57 years) 2 + 0.45 = 2.45 (Machine B has payback period of 2.45 years) Accounting Rate of Return Calculation Machine A $ Machine B $ Net Return 155‚000 205‚000 Total Return-Investment 155‚000 – 65‚000 = 90‚000 205‚000 – 85‚000 = 120‚000
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Year 11 Visual Arts Explain how the Lockheed Lounge can be considered an artwork? Art is the process of deliberately arranging elements in a way that appeals to the senses or emotions. The Lockheed Lounge‚ by Marc Newson‚ portrays the inspiration from the aerospace industry and mercury idea. The main features of the artwork involve the shape and texture produced‚ which create another meaning to art. The Lockheed Lounge demonstrates the very unique shape of its freeform ideal of art combined
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Investment Analysis and Lockheed Tri Star Group effort Total points: 100 (Course grade 25%) This case comprises four serially numbered stand-alone problems and the fifth one appears with the title of Lockheed Tri-Star. You are required to offer your calculations of values as indicated below. In addition to the calculations‚ write a brief summary of your findings in about 100 words for each problem. 1) Rainbow Products 20 points | Machine Purchase | Machine plus service contract
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**What is NPV?** a) If the value of NPV is greater than 0‚ then the project is a go! In other words‚ it’s profitable and worth the risk. b) If the value of NPV is less than 0‚ then the project isn’t worth the risk and is a no-go. So NPV takes risk and reward into consideration‚ which is why we use it in the world of corporate finance and capital budgeting. **Example** In order for us to calculate NPV‚ let’s use the following example. Suppose we’d like to make 10% profit on a 3
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before-tax required rate of return for Deer Valley is 14%. Compute the before-tax NPV of the new lift and advise the managers of Deer Valley about whether adding the lift will be a profitable investment. Show calculations to support your answer. 2. Assume that the after-tax required rate of return for Deer Valley is 8%‚ the income tax rate is 40%‚ and the MACRS recovery period is 10 years. Compute the after-tax NPV of the new lift and advise the managers of Deer Valley about whether adding the
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Lockheed Tri Star Case Study Introduction By 1966‚ Lockheed had already invested almost $900 million in research and development of the Tri Star L-1011 (Scott‚ 2010). By 1971‚ with over $1 billion in sunk costs‚ Lockheed was seeking a $250 million federal guarantee through a congressional hearing in order to complete the program. Lockheed presented their case as a liquidity issue caused by unrelated military contracts and assured that the Tri Star program was economically sound (text). Through
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[February 3 2011] Analysis of the future | Fast-Food industry The fast food industry in Canada is like no other in the world. Canada has long been a country of indulging and not caring about consequences. Stats Canada published that in 2004‚ 23.1% of the Canadian population was overweight. It has also been noted that the obesity rate seen a sharp increase during 1978 to 1980. The fast food industry did begin in the early part of the 1950’s‚ but didn’t truly take off till the 1980’s. In
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Computation of the NPV : NPV= -35‚000 + Σ 5‚000 / ( 1 + 12%)^ 15 i=1 NPV = $- 945. 67 Computation of the IRR : 0= -35‚000 + Σ 5‚000 / ( 1 + IRR)^ 15 i=12 IRR= 11.49% The NPV of this project is negative and the IRR is lower then the Cost of Capital (12%) Rainbow products shouldn’t go for it. (B) Based on the perpetuity formula we can compute the PV in this case : Computation of the PV : PV= Cash flow per year/ cost of capital) =4‚500 / 0.12 = $37‚500 Computation of the NPV : NPV= -Initial investment
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RnRCompanyProfiles.com offers “Lockheed Martin Corporation : Aerospace and Defense – Company Profile‚ SWOT and Financial Report” report published in Feb 2014. This report is of 62 pages and available starting US $ 125 for a single user PDF license. Order it now at http://www.rnrcompanyprofiles.com/contacts/purchase?rname=164702 . Synopsis Researcher’s “Lockheed Martin Corporation : Aerospace and Defense – Company Profile‚ SWOT and Financial Report” contains in depth information and data about
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