7.16 The cash flows associated with a public worksproject in Buffalo, New York, are shown. Use themodified B/C ratio at a discount rate of 5% peryear to determine the economic justification.First cost, $50,000,000AW of benefits, $/year7,500,000AW of disbenefits, $/year1,700,000M&O costs, $/year900,00030Life of project, years

To determine the economic justification of the public works project in Buffalo, New York, we will…

Answered: 7.16 The cash flows associated with a…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 16EB: Project Y cost $8,000 and will generate net cash inflows of $1,500 in year one, $2,000 in year two,...

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Project Y cost $8,000 and will generate net cash inflows of $1,500 in year one, $2,000 in year two, $2,500 in year three, $3,000 in year four and $2,000 in year five. What is the NPV using 8% as the discount rate?
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What is the net present value of a project with the following cash flows if the discount rate is 15 percent? Year 0: Cash Flow 5-48,000, Year 1: Cash flow = $15,600, Year 2: Cash flow = $28,900, Year 3: Cash flow = 515, 200 Seleccione una: A. -$1,618.48 B. $1,035.24 C. S9.593.19 D $2,687.98 E. $1,044.16
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Consider the following cash flows: Year Project A Project B ($200,000 0 ($95,000) 1 $100,000 $20,000 2 $125,000 $27,000 3 $55,000 $26,000 4 $25,000 5 6 $24,000 $23,000 Question 1: Find the NPV of each project at 9% discount rate using replacement chain analysis and comment on each of the project.
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Consider a project with the following information: Year 1 2 3 4 5 6 Initial outlay= $950,000 Compute the NPV if the company's discount rate is 10%. 1) $268,244 2) $201,650 3) $213,050 $129 After-tax cash flows $300,000 $400,000 $400,000 $200,000 $150,000 $150,000
3) Consider the following two projects: Net Cash Flow Each Period Initial Outlay 1 2 3 4 Project A $4,000,000 $2,003,000 $2,003,000 $2,003,000 $2,003,000 Project B $4,000,000 0 0 0 $11,000,000 Calculate the net present value of each of the above projects, assuming a 14 percent discount rate. What is the internal rate of return for each of the above projects? Compare and explain the conflicting rankings of the NPVs and IRRs obtained in parts a and b above. If 14 percent is the required rate of return, and these projects are independent, what decision should be made? If 14 percent is the required rate of return, and the projects are mutually exclusive, what decision should be made?
Flora Company has recorded the following cash flows at the end of each year for a project. If the discount rate of Flora Company is 11%, how much is the present value of the project?
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