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Year Investment A 2016 $400.000 2017 $400.000 2018 $400.000 2019 $400.000 2020 $400.000 Investment B $100.000 $100.000 $100.000 $1.000.000 $1.000.000 calculate the Npv of both project

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1. Consider the following investment projects: Year(n) Net cash flow Project 1 -$1,200 Project 2 -$2,000 1 600 1,500 2 1,000 1,500 IRR 19.65% 17.53% Determine the range of MARR for which Project 2 would be preferred over Project 1

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Net Present Value Method, Present Value Index, and Analysis for a service company Continental Railroad Company is evaluating three capital investment proposals by using the net present value method. Relevant data related to the proposals are summarized as follows:   MaintenanceEquipment RampFacilities ComputerNetwork Amount to be invested $591,053   $351,873   $159,991   Annual net cash flows:               Year 1 251,000   171,000   103,000     Year 2 233,000   154,000   71,000     Year 3 213,000   137,000   52,000     Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: 1.  Assuming that the desired rate…

Financial accounting

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Part D: Investment Decisions Now consider that Luxio has identified the following two mutually exclusive projects: Year 0 1 2 3 4 Cash Flow (A) -$34,000 $16,500 $14,000 $10,000 $6,000 Cash Flow (B) -$34,000 $5,000 $10,000 $18,000 $19,000. 1. What is the IRR for each of these projects? Based on IRR decision rule, which project should the company accept? 2. If the required return is 11%, what is the NPV for each of these projects? Based on the NPV decision rule, which project should the company accept? 3. Over what range of discount rates would the company choose project A? At what discount rate would the company be indifferent between these two projects? Explain.

Ranking Investment Proposals: Payback Period, Accounting Rate of Return, and Net Present Value Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal X Proposal Y Proposal Z $92,000 $92,000 $92,000 Initial investment Cash flow from operations Year 1 Year 2 Year 3 Disinvestment Life (years) 90,000 2,000 47,500 0 3 years 46,000 46,000 47,500 0 3 years 92,000 0 1 year Select the best investment proposal using the payback period, the accounting rate of return on initial investment, and the net present value criteria. Assume that the organization's cost of capital is 14 percent. Note: Follow rounding instructions noted for each computation. Use a negative sign with your answers, when appropriate. Proposal Z Best proposal 0 x Z 0✔ X,Y 0 X X Payback period (years) Accounting rate of return; Round answers to 4 decimal places. Net present value; Round answers to nearest whole number. Proposal X 0 x 0 x 0 x Proposal Y 0 x 0 x 0 x ◆ ◆ ◆ ✓

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Ranking Investment Proposals: Payback Period, Accounting Rate of Return, and Net Present Value Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal Proposal Proposal Initial investment Cash flow from operations Year 1 x Y Z $92,000 $92,000 $92,000 Year 2 Year 3 Disinvestment Life (years) 90,000 46,000 92,000 2,000 46,000 47,500 47,500 0 0 0 3 years 3 years 1 year Select the best investment proposal using the payback period, the accounting rate of return on initial investment, and the net present value criteria. Assume that the organization's cost of capital is 14 percent. Note: Follow rounding instructions noted for each computation. Use a negative sign with your answers, when appropriate. Proposal X Proposal Y Proposal Z Best proposal Payback period (years) Accounting rate of return; Round answers to 4 decimal places. Net present value; Round answers to nearest whole number. 2 ▾ 17.2098 x 2▾ 1 ▾ Z ÷ 20,547 ✔ 17.2098 x 15,808…

Compute the PI statistic for Project Z if the appropriate cost of capital is 6 percent. Project Z Cash flow: –$3,300 $730 $860 $1,030 $680 $480

Net Present Value Method, Present Value Index, and Analysis for a service company Continental Railroad Company is evaluating three capital investment proposals by using the net present value method. Relevant data related to the proposals are summarized as follows:   MaintenanceEquipment RampFacilities ComputerNetwork Amount to be invested $909,173   $541,268   $278,555   Annual net cash flows:               Year 1 405,000   284,000   178,000     Year 2 377,000   256,000   123,000     Year 3 344,000   227,000   89,000     Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: 1.  Assuming that the desired…

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You are given the following financial information related to a capital investment project. What is the project's Year 1 Net Cash Flow? Sales revenues Depreciation Other operating costs Interest Exp Tax rate WACC Select one: a. $8,580 b. $8,900 c. $9,350 d. $9,463 e. $9,832 $22,250 $8,000 $12,000 $800 40.0% 12.0%

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Clearcast Communications Inc. is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, estimated operating income, and net cash flow for each proposal are as follows: Operating Income Net Cash Flow Investment Year Proposal A: $450,000 $ 30,000 1 $120,000 2 30,000 120,000 3 20,000 110,000 4 10,000 100,000 (30,000) $ 60,000 $ 60,000 40,000 60,000 $510,000 $100,000 Proposal B: $200,000 1 80,000 3 20,000 60,000 4 (10,000) 30,000 (20.000) $ 90,000 20.000 $290,000 (Continued)

The following table contains information about four projects in which Morales Corporation has the opportunity to invest. This information is based on estimates that different managers have prepared about their potential project. E (Click the icon to view the projects information.) Requirements 1. Rank the four projects in order of preference by using the a. net present value. d. payback period. 2. Which method(s) do you think is best for evaluating capital investment projects in general? Why? c. internal rate of return. b. project profitability index. e. accounting rate of return. Requirement 1. Rank the projects in order of preference. (a) (b) (c) (d) (e) Net Present Profitability Internal Rate Payback Accounting Rate Value Index of Return Period of Return 1st preferred A C 2nd preferred 3rd preferred C 4th preferred ADB D AB

Ranking Investment Proposals: Payback Period, Accounting Rate of Return, and Net Present Value Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal A Proposal B Proposal C $ 45,000 $ 45,000 $ 45,000 Initial investment Cash flow from operations Year 1 Year 2 Year 3 Disinvestment Life (years) 40,000 5,000 22,500 22,500 22,500 22,500 0 0 3 years 3 years 45,000 0 1 year Select the best investment proposal using the payback period, the accounting rate of return on initial investment, and the net present value criteria. Assume that the organization's cost of capital is 12 percent.. Note: Follow rounding instructions noted for each computation. Use a negative sign with your answers, when appropriate. Proposal A Proposal B Proposal C Best proposal Payback period (years) Accounting rate of return; Round answers to 4 decimal places. Net present value: Round answers to nearest whole number. S

The following table tracks the main components of working capital over the life of a four-year project.   2021 2022 2023 2024 2025 Accounts receivable 0 174,000 249,000 214,000 0 Inventory 87,000 142,000 142,000 107,000 0 Accounts payable 31,000 56,000 62,000 41,000 0 Calculate net working capital and the cash inflows and outflows due to investment in working capital.

You are given the following data for a project that is to be evaluated using the APV method. Year EBIT CAPEX 0 O $201.765 O $193,822 O $185,617 O $222,872 O $213,918 1 $127.000 $60,000 2 Depreciation Increase in NWC Year-end net debt $80,000 Cost of net debt = 8% Unlevered cost of capital = 11.8% Corporate tax rate = 30% Calculate the total value of the project at t = 0. using the APV method. $72,000 $50,000 $100,000 $133,000 $40,000 $80,000 $60,000 $140,000 3 $138.500 $10,000 $84,000 $30,000 $140,000

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Solve this general accounting question

Year Project 1 Net Cash Flows Project 2 Initial investment $(60,000) $(55,500) 1. 2. 15,000 35,000 27,400 3. 22,000 15,000 22,000 a. Compute payback period for each project. Based on payback period, which project is preferred? b. Compute net present value for each project. Based on net present value, which project is preferred? Complete this question by entering your answers in the tabs below. Required A Required B Compute net present value for each project. Based on net present value, which project is preferred? Note: Round your present value factor to 4 decimals. Round your final answers to the nearest whole dollar. Net Cash Flows Present Value Present Value of Net Factor Cash Flows Project 1 Year 1 Year 2 Year 3 Totals Initial investment Net present value Project 2 Year 1 Year 2 Year 3 Totals Initial investment $ 0 $ 0 $ 0 $ 0 $ 0 Net present value Based on net present value, which project is preferred? $ 0