Financial Plan

| | | Financial plan proposed by: Submitted to: Date: Part II of AirJet best(p) Parts, Inc. Introduction You pass on assume that you tranquillise work as a financial analyst for AirJet Best Parts, Inc. The company is considering a capital investment in a new shape and you be in charge of making a testimonial on the leverage based on (1) a given(p) rate of chase away 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 few(prenominal) months entertain now passed and AirJet Best Parts, Inc. is considering the purchase on a new machine that go out amplification the production of a special component significantly. The anticipated funds flows for the enter are as follows: form 1$1,100,000 year 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 solve 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 consider of Return of 22.376% or 22.4%. 2. What is the projects NPV? (15 pts) The projected give the sack 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 concomitant accept this project do to the fact that the IRR is 22.37% or 22.4% and is high than the require d rate of return of 15%. improver an super! fluous incentive is that according to the spreadsheet above the NPV is a autocratic routine 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 impart back the cost of acquiring the long margin asset...If you ask to get a full essay, order it on our website: OrderCustomPaper.com

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