Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. your firm has been hired to develop new software f

Your firm has been hired to develop new software for the university's class registration system....

50.1K

Verified Solution

Question

Finance

Your firm has been hired to develop new software for the university's class registration system. Under the contract, you will receive $496,000 as an upfront payment. You expect the development costs to be $455,000 per year for the next 3 years. Once the new system is in place, you will receive a final payment of $909,000 from the university 4 years from now.

a. What are the IRRs of this opportunity? (Hint: Build an Excel model which tests the NPV at 1% intervals from 1% to 40%. Then zero in on the rates at which the NPV changes signs.)

b. If your cost of capital is 10% , is the opportunity attractive? Suppose you are able to renegotiate the terms of the contract so that your final payment in year 4 will be 1.3 million.

c. What is the IRR of the opportunity now?

d. Is it attractive at the new terms?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

How do pacemaker cells generate a rhythmic action potential? What makes them autorhythmic?

Medical Sciences
Q

A disk with outer radius ro = 150 mm and inner radius ri = 25...

Mechanical Engineering
Q

Directions: After reading lesson one in your HMH assignment, Empires in Africa and Asia. Answer...

Biology
Q

The mean height of the 2018 Women s World Cup Basketball team is Sue Bird...

Basic Math
Q

Use Gaussian elimination to find the complete solution to the following system of equations, or...

Basic Math
Q

Write the exponential function y= 500e-0.07t in the form y =abt(a) Once you have rewritten...

Basic Math
Q

P6.4 Equity method The financial statements of A Co are shown below. P Co acquired...

Accounting
Q

In the percentage of completion method, what does it mainly calculate? Total revenue Total profit...

Accounting
Q

Please write a short report (not more than 600 words) concerning the allocation of indirect...

Accounting
Q

Erie Company manufactures a mobile fitness device called the Jogging Mate. The company uses standards...

Accounting
Q

Please answer this and give your reasoning. Thanks. CP 27-1 Ethics and professional conduct...

Accounting
Q

John Fleming. chief administrator for Valley View Hospital, is concerned about the costs for tests...

Accounting