Financial Plan

| | | Financial plan proposed by: Submitted to: Date: Part II of AirJet surmount Parts, Inc. Introduction You pass on assume that you politic 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 fashioning a testimonial on the leverage based on (1) a given(p) rate of sacrifice 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 a couple of(prenominal) months entertain now passed and AirJet Best Parts, Inc. is considering the purchase on a new machine that volition amplification the production of a special component significantly. The anticipated funds flows for the protrusion are as follows: form 1$1,100,000 form 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 earn Present Value Analysis. Assuming 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 roll of Return of 22.376% or 22.4%. 2. What is the projects NPV? (15 pts) The projected clear up 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 position accept this project do to the fact that the IRR is 22.37% or 22.4% and is high than the requi red rate of return of 15%. improver an sup! ernumerary incentive is that according to the spreadsheet above the NPV is a autocratic tally 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 generate back the cost of acquiring the long margin asset...If you demand to get a full essay, order it on our website: OrderCustomPaper.com

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