Internal Code: MAS6280
Delcom Chemicals is considering the purchase of a new industrial business for $800,000. The current owners have provided Delcom Chemicals with their financial information which has shown that they will expect a profit of $200,000 in year one, $210,000 in year two, $300,000 in year three, $320,000 in year four, and $340,000 in year five. Using the information above, Calculate the net present value (assuming a discount rate of 13%), payback period and accounting rate of return (disregarding depreciation).
Delcom has also been provided with the opportunity to purchase an existing chemical plant for $800,000. Information to help them determine their future cash flow for the new business if they were to purchase it is shown below for the next 4 months starting in January. Assume that there is 4 weeks in every month. Total monthly running costs:
1) 14 staff members who will work 7.5 hours a day, 5 days a week at $26.50 per hour.
2) Raw materials $300,000
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