1. An initial investment of Rs.8,320 on machinery is expected to generate net cash flows of Rs.3,411 at the end of first year, Rs.4,070 in second year, Rs.5,824 in third year and Rs.2,065 at the end of fourth year respectively. Find the net present value of the Machine. 2. Zubair purchases material by Rs. 20,000 per year and pays R. 10,000 for storage space. He recently received two job offers from a famous marketing firm-one offer was for Rs. 250,000 per year, and the other was for Rs. 190,000. However, he turned both jobs down to continue his business. If he sells 50 units of his product per year at a price of Rs. 10,000 each: a. What are her accounting profits? b. What are her economic profits?

1. An initial investment of Rs.8,320 on machinery is expected to generate net cash flows of Rs.3,411 at the end of first year, Rs.4,070 in second year, Rs.5,824 in third year and Rs.2,065 at the end of fourth year respectively. Find the net present value of the Machine. 2. Zubair purchases material by Rs. 20,000 per year and pays R. 10,000 for storage space. He recently received two job offers from a famous marketing firm-one offer was for Rs. 250,000 per year, and the other was for Rs. 190,000. However, he turned both jobs down to continue his business. If he sells 50 units of his product per year at a price of Rs. 10,000 each: a. What are her accounting profits? b. What are her economic profits?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Calculate Internal Rate of Return to the investor based on a sale of the project at 12/31/26 using a 6.75% Cap Rate as sale value and 2% closing costs. Assume minimum $10,000 working capital at end of every year. All other cash flow is Distributable to investor.
The salvage value of an asset is RM75,000. The annual cash flow is RM 10,500, and the networking capital is RM4,800. If the tax rate is 28%, what is the terminal cash flow of the asset?
An investor pays $275,000 for a mine that will produce level annual revenue for 18 years. What should the level annual revenue be (received at the end of each year) if the investor is to receive 4% annual return on the investment while recovering the principal in a sinking fund earning 2.5% per year?
When an investment’s annual net cash inflows are equal every year, the investment’s payback period can be calculated as: (See your Chapter 25 notes, page 2) When an investment’s annual net cash inflows are equal every year, the investment’s payback period can be calculated as: (See your Chapter 25 notes, page 2) Initial cost of the investment minus the annual net cash inflow Average amount of the investment divided by the average annual net income Initial cost of the investment divided by the annual net cash inflow Present value of net cash inflow divided by the initial cost of the investment Future value of net cash inflow divided by the initial cost of the investment Present value of the net cash inflow minus the initial cost of the investment Annual net cash inflow minus the initial cost of the investment Average annual net income divided by the average amount of the investment
4. Project cost is 40,000 and the cash inflows are Rs. 10,000, the life of the project is 5 years. Calculate the pay-back period.
Consider a piece of equipment for which the expenditure at the beginning of period 1 is $20,000 The net revenue at the end of year 1 is $8,000 The net revenue at the end of year 2 is $14,000 The net revenue at the end of year 3 is $18,000, which includes salvaging the equipment. The interest rate is 5%. What is the net present value of this investment over the three year period including the initial purchase of the asset and the revenue from the first three years of operation (including sale of the equipment)?
The highway department expects the maintenance cost for a piece of heavy construction equipment to be 5,000 Ghana cedis in a year 1, 5500 in year 2 and to increase by 10%annually through year 10. At an interest rate of 15% per year, show up he cash flow diagram for the maintenance programme and determine the present worth of 10 years of maintenance costs
Please
1. A mechanical device will cost $30,000 when purchased. Maintenance will cost $2,000 each year. The device will generate revenues of $5,000 each year for five years. At the end of the fifth year, the salvage value of the device is $6,500. Draw and simplify the cash flow diagram. Calculate: (a) the present value and (b) the equivalent annual cost of the cash flows using a discount rate of 12%.
Home Security Systems is analyzing the purchase of manufacturing equipment that will cost $56,000. The annual cash inflows for the next three years will be: Year 1 2 3 Cash Flow $ 28,000 26,000 21,000 Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the financial calculator method. a. Determine the internal rate of return. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Internal rate of return %
The Upfront Company has invested RM 123,000 on fully computerized equipment with an operation and maintenance cost of RM 7,800 per year, life span of five (5) years, and residual value of RM 9,000. The production has generated an income of RM 40,000 per year. Calculate the actual worth of the investment if the MARR is 12% per year. Illustrate with a proper cash flow diagram.
The West Mount Trading deposited yearly an amount of $5000 for 15 years. The accumulated amount was used to cover an emergency repair costing $100,000 in year 15. Draw the cash flow diagram. Calculate the rate of return of that this investment provided to the West Mount Trading.

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