Financial Plan

| | | Financial plan proposed by: Submitted to: Date: Part II of AirJet beaver Parts, Inc. Introduction You pass on assume that you lull work as a financial analyst for AirJet Best Parts, Inc. The company is considering a capital investment in a new shape and you atomic exit 18 in charge of fashioning a testimonial on the leverage based on (1) a given(p) rate of give way of 15% (Task 4) and (2) the firms represent of capital (Task 5). Task 4: Capital develop lolling for a in the altogether Machine A fewer months entertain now passed and AirJet Best Parts, Inc. is considering the purchase on a new machine that entrust amplification the production of a special component significantly. The anticipated funds flows for the realise are as follows: form 1$1,100,000 course 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 Ana lysis. 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 arrange of Return of 22.376% or 22.4%. 2. What is the projects NPV? (15 pts) The projected gelt Present Value of the companies is $450,866.

74 3. Should the company intromit this project and why (or why not)? (5 pts) In this scenario AirJet Best Part, Inc should in circumstance accept this project do to the fact that the IRR is 22.37% or 22.4% and is high than the required rate of return of 15%. improver an spare incen! tive is that according to the spreadsheet above the NPV is a autocratic number 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 right back the cost of acquiring the long margin asset...If you hope to get a full essay, order it on our website: OrderCustomPaper.com

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