Part 1) A new project has an investment of one million and it will generate a cash flow at the end of the first year of $632,000 and at the end of the second year $725,000. Calculate the IRR for this project.
Part 2) The revenues for a project are 1.2 million at the end of the first year and 2.6 millions at the end of the second year. If the investor is evaluating this project assuming a yield of 10% per year. How much is the present value (investment) of this project?
Part 3) A 5 years’ project is defined as it follows:
Revenues are $645,000 the first year and will increase 3% per year for the next 4 years.
Fixed cost are $52,000 and they will increase 5% the first 2 years and will remain constant for the following years.
Variable cost is assumed to be 8% of the Revenues.
The initial investment is $800,000
Fixed assets are priced at $250,000 and they are depreciated linearly for 5 years with a residual value of zero.
Taxes are 35%
Calculate:
Revenues per year
Variable Cost per year
Fixed Cost per year
EBIT per year.