Information on four investment proposals is given below.Investment requiredPresent value of cash inflowsNet present value.Life of the projectInvestment ProfitabilityIndexProposalABCD$ (280,000)393,900$ 113,900RankPreference5 yearsInvestment ProposalB5 (140,000)192,800$ 52,800Required:1. Compute the profitability index for each investment proposal (Round your answers to 2 decimal places.)2. Rank the proposals in terms of preference7 years$ (50,000)78,100$ 28,1006 yearsD$ (780,000)1,038,100$ 258,1006 years

The Profitability Index is a financial indicator that compares the present value of predicted future…

Answered: 393,900 $113,900 5 years 192,000 $…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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38 39 5. What is the payment in month 336 on a 30-year loan for $925,000 at 4.85% that requires 40 interest only payments for the first eight years and fully amortizing payments for the 41 remaining years of the loan? 42 43 Loan Amount 44 Periods Per Year 45 Interest Rate 46 Payment in First Five Years 47 Total Amortization Years 48 69 49 $925,000.00 Answer ($5,705.78) 12 4.85% 22
Question 86 The following information is from First Yaupon Savings Association. Use this chart to answer questions 86-87. Assets 2 year commercial $600 loans million Par Amount +$100 million. -$500 million. -$100 million. O + $500 million. -$900 million. Rate Liabilities 10% 1 year CDs Par Amount $900 million Rate 2 year Treasury $400 Net $100 bills million Worth million What is the repricing gap over the 1-year maturity bucket? 7%
5-18 Calculating deposit needed You put $10,000 in an account earning 5%. After 3 years, you make another deposit into the same account. Four years later (that is, 7 years after your original $10,000 deposit), the account balance is $20,000. What was the amount of the deposit at the end of year 3? P5-22 Retirement planningju Ban CHA 203 -as prueue, wishes to recre
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QUESTION 9 Home Express Moving Company is considering purchasing new equipment that costs $728,000. Its management estimates that the equipment will generate cash inflows of $50,000 semiannually for its 2 year life. Present value of $1: 6% 1 2 3 4 5 0.943 0.890 0.840 0.792 0.747 O $235,750 O $100,000 O $200,000 Ⓒ$152,600 7% 8% 0.917 0.926 0.857 0.842 0.772 0.708 0.650 9% 0.935 0.873 0.816 0.794 0.763 0.735 0.713 0.681 10% 0.909 0.826 0.751 0.683 0.621 The company's annual required rate of return is 14%. Using the factors in the table, calculate the present value of the cash flows
MACRS Year 0 Depreciation Rate 33.33% $55,998 $79,608 $57,962 A machine is purchased for $850,000 and is used through the end of Year 2. The machine will be depreciated using the 3-Year MACRS schedule in the table above. At the end of Year 2, the machine is sold for $75,000. What is the after-tax cash flow from the sale of the machine at the end of Year 2 if the firm's marginal tax rate is 35%? $62,985 $75,000 Project Year Year 1 44.45% $70,795 Year 2 14.81% Year 3 7.41%
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2 204.3847 ebook P Hard Hat Company is in the process of purchasing several large pieces of equipment from Machine Corporation. Several financing alternatives have been offered by Machine: 1. Pay $1160,000 in cash immediately. 2. Pay $461,000 immediately and the remainder in 10 annual installments of $94,000, with the first installment due in one year. 3. Make 10 annual installments of $156,000 with the first payment due immediately 4. Make one lump-sum payment of $1,730,000 five years from date of purchase. Required: Determine the best alternative for Hard Hat, assuming that Hard Hat can borrow funds at a(n) 8% interest rate. Note: Round your final answers to nearest whole dollar amount. Use tables, Excel, or a financial calculator. (EV of S1 PV of $1. EVA of51. PVA of$1. EVAD of $1 and PVAD of $3 Option 1 Option 2 Option 3 Option 4 The best alternative for Hard Hat PV Check
15

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393,900 $113,900 5 years 192,000 $ 52,800 7 years 78,100 $ 28,100 6 years 1,038,160 $ 258,100 6 years