Business & Finance Assignment | Custom Assignment Help
December 3rd, 2019
Assume discount rate or weighted average cost of capital 10%- Ignore all taxes and depreciation.
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A company wants to build a new factory for increased capacity. Using NPV method of capital budgeting. Building new factory will increase capacity by 30%
- Current capacity is $10 million of sales with 5% profit margin
- Factory Cost $10 million to build
- New capacity will meet company need for 10 years
- The factory is worth $14 million over 10 years. Should this project be accepted or rejected
- Explain effect of higher and lower cost of capital on firm’s long-term financial decision.
- Apply calculations analyze the use of capital budgeting techniques in strategic financial management
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