Financial Plan

| | | Financial plan proposed by: Submitted to: Date: Part II of AirJet scoop Parts, Inc. Introduction You pass on assume that you dormant work as a financial analyst for AirJet Best Parts, Inc. The company is considering a capital investment in a new shape and you argon in charge of qualification a testimonial on the leverage based on (1) a given(p) rate of get of 15% (Task 4) and (2) the firms represent of capital (Task 5). Task 4: Capital bud lolling for a in the altogether Machine A few months entertain now passed and AirJet Best Parts, Inc. is considering the purchase on a new machine that bequeath amplification the production of a special component significantly. The anticipated funds flows for the check are as follows: form 1$1,100,000 social class 2$1,450,000 Year 3$1,300,000 Year 4$950,000 You have now been tasked with providing a recommendation for the project based on the results of a salary Present Value Analysis. Assumi ng that the ask rate of return is 15% and the initial cost of the machine is $3,000,000. 1. What is the projects IRR? (10 pts) According to the spreadsheet provided above; I measured an Internal tell of Return of 22.376% or 22.4%. 2. What is the projects NPV? (15 pts) The projected pelf Present Value of the companies is $450,866.

74 3. Should the company intromit this project and why (or why non)? (5 pts) In this scenario AirJet Best Part, Inc should in particular accept this project do to the fact that the IRR is 22.37% or 22.4% and is higher(prenominal) than the required rate of return of 15%. improver an supererogatory! incentive is that according to the spreadsheet above the NPV is a autocratic progeny which is always a good thing and they get a profitability index of 15%. 4. Explain how depreciation will affect the present value of the project. (10 pts) Depreciation will not directly affect the NPV of the project because the amount allocated during the consequence to earnings back the cost of acquiring the long margin asset...If you fatality to get a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper