Hyundai is evaluating whether to build a new factory. The proposed investment will cost 3 million to build and provide cash savings of $400,000 per year over the next 10 years. a) What is the rate of return offered by the investment? b) If Hyundai plans to reinvest $300,000 in the facility at the end of the fifth year, and will extend the life of the project by 4 years and b during that time, the company will continue to receive cash savings of $400,000. So, what is the IRR of this investment?
Hyundai is evaluating whether to build a new factory. The proposed investment will cost 3 million to build and provide cash savings of $400,000 per year over the next 10 years. a) What is the rate of return offered by the investment? b) If Hyundai plans to reinvest $300,000 in the facility at the end of the fifth year, and will extend the life of the project by 4 years and b during that time, the company will continue to receive cash savings of $400,000. So, what is the IRR of this investment?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 10PA: The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000,...
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Hyundai is evaluating whether to build a new factory. The proposed investment will cost 3 million to build and provide cash savings of $400,000 per year over the next 10 years.
a) What is the rate of return offered by the investment?
b) If Hyundai plans to reinvest $300,000 in the facility at the end of the fifth year, and will extend the life of the project by 4 years and b during that time, the company will continue to receive cash savings of $400,000. So, what is the IRR of this investment?
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