1) XYZ Company is considering investing in a project that requires an initial investment of $200,000 for some machinery. There will be net inflows of $50,000 for the first two years, $35,000 in years three and four, and $50,000 in year five. Find the accounting rate of return for the machine. 3) A project requires an initial investment of $200,000 and is expected to generate the following net cash inflows: PROJECT A Year 1:60,000 Year 2:60,000 Year 3:80,000 Year 4:30,000 Year 5:30,000 Required: Compute the Pay back Period if the minimum desired rate of return is 10%. PVIF .909, .826, .751, .680, .623

1) XYZ Company is considering investing in a project that requires an initial investment of $200,000 for some machinery. There will be net inflows of $50,000 for the first two years, $35,000 in years three and four, and $50,000 in year five. Find the accounting rate of return for the machine. 3) A project requires an initial investment of $200,000 and is expected to generate the following net cash inflows: PROJECT A Year 1:60,000 Year 2:60,000 Year 3:80,000 Year 4:30,000 Year 5:30,000 Required: Compute the Pay back Period if the minimum desired rate of return is 10%. PVIF .909, .826, .751, .680, .623

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Bnn corporation is currently evaluating a project that requires an initial investment of $1,000,000 with a hurdle rate pf 5%. Below are the expected cash inflow for the next five years of the project. year 1 400,000 year 2 300,000 year 3 200,000 year 4 100,000 year 4 200,000 1. how long will it take for bnn corporation to recover its initial investment? 2. what is the NPV of the investment? Round of answers to four decimal places
a) Calculate the discounted payback period for the project. b) Calculate the Net Present Value of the project.
Snyder Company is considering purchasing equipment. The equipment will produce the following cash inflows: Year 1, $25,000; Year 2, $30,000; and Year 3, $40,000. Snyder requires a minimum rate of return of 11%. What is the maximum price Snyder should pay for this equipment?
A project is projected to cost $2,000,000 to undertake. It will generate positive cash inflows as follows: Year 1 - $400,000; Year 2 500,000; Year 3 - $650,000; ear 4 - 750,000; Year 5 - 800,000. What is the project's Profitability Index if the required return is 10% ?
There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $34,927 and is expected to generate the following cash flows: First Year Second Year Third Year Total Alpha Project $32,500 $22,500 $4,500 $59,500 Beta Project 7,000 23,500 27,904 58,404 A. Calculate the internal rate of return on both projects. Use the IRR spreadsheet function to calculate internal rate of return. Alpha Project fill in the blank % Beta Project fill in the blank % B. Make a recommendation on which one to accept.
Use the NPV method to determine whether Rouse Products should invest in the following projects: • Project A costs $270,000 and offers seven annual net cash inflows of $64,000. Rouse Products requires an annual return of 14% on projects like A. • Project B costs $395,000 and offers ten annual net cash inflows of $72,000. Rouse Products demands an annual return of 12% ch investments of this nature. (Click the icon to view the present value annuity table.) (Click the icon to view the present value table.) (Click the icon to view the future value annuity table.) (Click the icon to view the future value table.) Requirement What is the NPV of each project? What is the maximum acceptable price to pay for each project? Calculate the NPV of each project. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for negative net present values.) The NPV of Project A is
A project requires an initial investment of $225,000 and is expected to generate the following net cash inflows: Year 1: $95,000 Year 2: $80,000 Year 3: $60,000 Year 4: $55,000 Required: Compute net present value of the project if the minimum desired rate of return is 12%. Calculate the following: Payback Period NPV IRR
Use the NPV method to determine whether Stenback Products should invest in the following projects: Project A: Costs $260,000 and offers eight annual net cash inflows of $54,000. Stenback Products requires an annual return of 14% on investments of this nature. Project B: Costs $395,000 and offers 10 annual net cash inflows of $77,000. Stenback Products demands an annual return of 12% on investments of this nature. (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Read the requirements. Requirement 1. What is the NPV of each project? Assume neither project has a residual value. Round to two decimal places. (Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sign for a negative net present value.) Caclulate the NPV (net present value) of each project. Begin by calculating the NPV of Project A Net Cash Inflow Project A: Years 1-8 0 Present value of annuity Investment Net present value…
Jasmine Manufacturing is considering a project that will require an initial investment of $52,000 and is expected to generate future cash flows of $10,000 for years 1 through 3, $8,000 for years 4 and 5, and $2,000 for years 6 through 10. What is the payback period for this project?
A firm is evaluating a proposal which has aninital investment of $45,000 and has cash flows of $5,000 in year 1, $20,000 in year 2, $15,000 in year 3 and $10,000 in year 4. The payback period of the project is:
Kingston, Inc. management is considering purchasing a new machine at a cost of $4,150,315. They expect this equipment to produce cash flows of $756,424, $834,614, $932,657, $1,071,731, $1,298,352, and $1,243,375 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this investment? (Enter negative amounts using negative sign e.g. -45.25. Round answer to 2 decimal places, e.g. 15.25.) The NPV is $ _____________
The Gamma Company is planning on investing in a new project. This project requires an initial investment into a new machinery of $450,000. The Gamma Company expects cash inflows from this project to be as follows: $200,000 in year 1, $225,000 in year 2, $275,000 in year 3, and $200,000 in year 4 of the project. The appropriate discount rate for this project is estimated at 17% . What is the IRR of this project? 30.9% 21.5% 39.2% 27.4% 34.1% 24.3%