true
breakeven analysis
Midwest Water Works estimates that its WACC is 10.5%. The company is considering the following capital budgeting projects: Project Size Rate of Return A $1 million 12.0% B 2 million 11.5% C 2 million 11.2% D 2 million 11.0% E 1 million 10.7% F 1 million 10.3% G 1 million 10.2% Assume that each of these projects is just as risky as the firm's existing assets, and the firm may accept all the projects or only some of them. Which set of projects should be accepted?
Almendarez Corporation is considering the purchase of a machine that would cost $320,000 and would last for 7 years. At the end of 7 years, the machine would have a salvage value of $51,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $72,000. The company requires a minimum pretax return of 18% on all investment projects. The net present value of the proposed project is closest to: Best answer is available on onlinesolutionproviders.com thanks
What happens to the quick return ratio when the stroke length is reduced?
Type your answer here... weekly
It is the lowest return on project or investment that will make the firm or investor to accept that project.
It is the lowest return on project or investment that will make the firm or investor to accept that project.
The IRR rule states that if the internal rate of return (IRR) on a project or investment is greater than the minimum required rate of return - the cost of capital - then the decision would generally be to go ahead with it. Conversely, if the IRR on a project or investment is lower than the cost of capital, then the best course of action may be to reject it.
Hurdle rate
The minimum rate of return the company must earn to be willing to make the investment. It is the rate of return the company could earn if, rather than making the capital investment, it invested the money in an alternative, but comparable, investment.
return on capital = earnings before interest and tax / capital employed * 100
it implicitly assumes that the firm is able to reinvest the interim cash flows from a project at the firm's cost of capital
The rate of return on capital investment is the amount of money earned on an original investment. The objection to the standard rate of return is the restriction in accessing increase or leaving the project. There is also a fear that documented gain and financial increase is not always represent real money.
A change in the required rate of return will affect a project's Internal Rate of Return (IRR) by potentially shifting the project's feasibility. If the required rate of return increases, the project's IRR needs to be higher to be considered acceptable. Conversely, a decrease in the required rate of return could make the project's IRR more attractive.
The minimum Required Rate of Return should be calculated by looking at the rate of return that would be gained by putting money in a savings accounts that accrues interest at the current rate. If you investment is not projected to make more profit than that it does not meet the minimum Required Rate of Return.
The way to calculate the Return on Capital (ROC) or Return on Investment (ROI) is dividing net earning between the total capital. The result is multiplied by 100, and you get the percentage.
It is similar to Return on capital employed (ROCE).