A company is considering a $168,000 investment in machinery with the following net cash flows. The company requires a 10% returnon its investments. (PV of $1, FV of $1, PVA of $1. and FVA of $1) (Use appropriate factor(s) from the tables provided.)Net Cash Flow(a) Compute the net present value of this investment.(b) Should the machinery be purchased?YearYear 11Year 2Year 1$10,000Complete this question by entering your answers in the tabs below.Year 3Year 4Year 5TotalsInitial investmentNet present valueRequired A Required BCompute the net present value of this investment. (Round your present value factor to 4 decimals. Round your final answersto the nearest whole dollar.)Year 2$29,000Net CashFlows$0Present ValueFactorYear 3$55,000Present Value ofNet Cash Flows$$Required AYear, 4$42,00000Year 5$113,000Required > A company is considering a $168,000 investment in machinery with the following net cash flows. The company requires a 10% returnon its investments. (PV of $1. FV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided.)Year 1$10,000Year 2$29,000Net Cash Flow(a) Compute the net present value of this investment.(b) Should the machinery be purchased?Required A Required B.Should the machinery be purchased?Should the machinery be purchased?Year 3$55,000Complete this question by entering your answers in the tabs below.Year 5$113,000

Net present value is technique used to evaluate capital budgeting projects. Net present value is…

A company is considering a $168,000 investment in machinery with the following net cash flows. The company requires a 10% return on its investments. (PV of $1. FV of $1, PVA of $1. and FVA of $1) (Use appropriate factor(s) from the tables provided.) Net Cash Flow (a) Compute the net present value of this investment. (b) Should the machinery be purchased? Year Year 1 $10,000 Year 1 Year 2 Year 3 Year 4 Year 5 Complete this question by entering your answers in the tabs below. Totals initial investment Net present value Year 2 $29,000 Required A Required B Compute the net present value of this investment. (Round your present value factor to 4 decimals. Round your final answers to the nearest whole dollar.) Net Cash Flows $ 0 Present Value Factor Year 3 $55,000 Present Value of Net Cash Flows $ Year, 4 $42,000 S Year 5 $113,000

A company is considering a $168,000 investment in machinery with the following net cash flows. The company requires a 10% return on its investments. (PV of $1. FV of $1, PVA of $1. and FVA of $1) (Use appropriate factor(s) from the tables provided.) Net Cash Flow (a) Compute the net present value of this investment. (b) Should the machinery be purchased? Year Year 1 $10,000 Year 1 Year 2 Year 3 Year 4 Year 5 Complete this question by entering your answers in the tabs below. Totals initial investment Net present value Year 2 $29,000 Required A Required B Compute the net present value of this investment. (Round your present value factor to 4 decimals. Round your final answers to the nearest whole dollar.) Net Cash Flows $ 0 Present Value Factor Year 3 $55,000 Present Value of Net Cash Flows $ Year, 4 $42,000 S Year 5 $113,000

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

Beyer Company is considering buying an asset for $350,000. It is expected to produce the following net cash flows. Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal places.)
Alonso Yards Corp. is considering an investment opportunity with the following expected net cash inflows: Alonso Yards Corp. Year 1 $203,000 Year 2 $185,000 Year 3 $106,000 The company uses a discount rate of 9%, and the initial investment of $380,000. Calculate the NPV of the investment.
Pena Company is considering an investment of $21,705 that provides net cash flows of $6,700 annually for four years. (a) If Pena Company requires a 7% return on its investments, what is the net present value of this investment? (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your present value factor to 4 decimals.) (b) Based on net present value, should Pena Company make this investment? Complete this question by entering your answers in the tabs below. Required A Required B What is the net present value of this investment? Years 1-4 Initial investment Net present value Net Cash Flows 6,700 x PV Factor Required A Present Value of Net Cash Flows 0 21,705 Required B >
You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future investments in new plant and working capital: Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Pretax profit Tax at 30% Investment Answer is complete but not entirely correct. a. Total value b. Laputa's equity 1 $ 86 26 60 18 15 $ $ Year 629 x 377 2 $ 106 36 70 21 18 3 $ 121 41 80 From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 60% by equity and 40 % by debt. Its cost of equity is 17%, its debt yields 8%, and it pays corporate tax at 30%. 24 21 a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. b. What is the value of Laputa's equity? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest…
You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future investments in new plant and working capital: Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Pretax profit Tax at 30% Investment 1 $ 78 38 40 12 14 Year a. Total value b. Laputa's equity 2 $ 98 48 50 15 17 3 $ 113 53 60 18 20 4 $ 118 58 60 18 22 From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 40% by equity and 60% by debt. Its cost of equity is 13%, its debt yields 9%, and it pays corporate tax at 30%. a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. b. What is the value of Laputa's equity? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount.
A potential project involves an initial investment in machinery of RO.1,000,000 and has the following cash inflows:Year 1 – RO.250,000Year 2 – RO.350,000Year 3 – RO.200,000Year 4 – RO.400,000At the end of year 4, the machinery will be sold for RO.600,000.Calculate the accounting rate of return based on average investment.NOTE (DEDUCT THE DEPRECIATION TO ARRIVE AT THE CORRECT AVERAGE PROFIT) a. None of the options b. 35% c. 20% d. 25% Clear my choice
You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future investments in new plant and working capital: Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Pretax profit Tax at 30% Investment 1 $ 75 15 60 18 17 Year a. Total value b. Laputa's equity 2 $ 95 25 70 21 20 3 $ 110 30 80 24 23 4 $ 115 35 80 24 25 From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 40% by equity and 60% by debt. Its cost of equity is 16%, its debt yields 7%, and it pays corporate tax at 30%. a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. b. What is the value of Laputa's equity? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount.
A firm has projected the following financials for a possible project: YEAR Sales Cost of Goods S&A Depreciation Investment in NWC Investment in Gross PPE 0 1,130.00 105,468.00 1 132,716.00 Submit 549.00 2 62,780.00 62,780.00 30,000.00 30,000.00 30,000.00 21,093.60 21,093.60 21,093.60 Answer format: Currency: Round to: 2 decimal places. 3 132,716.00 132,716.00 132,716.00 549.00 What is the NPV of the project? (Hint: Be careful about rounding the WACC here!) 4 62,780,00 62,780.00 62,780.00 30,000.00 549.00 21,093.60 549.00 5 132,716.00 The firm has a capital structure of 37.00% debt and 63.00% equity. The cost of debt is 9.00%, while the cost of equity is estimated at 15.00%. The tax rate facing the firm is 38.00%. (Assume that you can't recover the final NWC position in year 5. i.e. only consider the change in NWC for each year) 30,000.00 21,093.60 549.00
A company is considering a $166,000 investment in machinery with the following net cash flows. The company requires a 10% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Year 1 Year 2 Year 3 Year 4 Year 5 Net Cash Flow $10,000 $28,000 $55,000 $42,000 $111,000 (a) Compute the net present value of this investment.(b) Should the machinery be purchased?
You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future investments in new plant and working capital: Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Pretax profit Tax at 30% Investment $ 87 DARIK a. Total value b. Laputa's equity 17 70 21 16 Year 2 $107 27 86 24 19 $122 32 27 22 4 $127 37 90 27 24 From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 40% by equity and 60% by debt. Its cost of equity is 18%, its debt yields 9%, and it pays corporate tax at 30%. a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. b. What is the value of Laputa's equity? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. (11
Pena Company is considering an investment of $30,455 that provides net cash flows of $9,400 annually for four years. (a) If Pena Company requires a 7% return on its investments, what is the net present value of this investment? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your present value factor to 4 decimals.) (b) Based on net present value, should Pena Company make this investment? Complete this question by entering your answers in the tabs below. Required A Required B What is the net present value of this investment? Years 1-4 Net present value Net Cash Flows X PV Factor
Questions: Crowell Company is considering two capital investments. Both investments have an initial cost of $9,000,000 and total net cash inflows of $17,000,000 over 10 years. Crowell requires a 15% rate of return on this type of investment. Expected net cash inflows are as follows: Requirements - X 1. Use Excel to compute the NPV and IRR of the two plans. Which plan, if any, should the company pursue? 2. Explain the relationship between NPV and IRR. Based on this relationship and the company's required rate of return, are your answers as expected in Requirement 1? Why or why not? 3. After further negotiating, the company can now invest with an initial cost of $8,100,000. Recalculate the NPV and IRR. Which plan, if any, should the company pursue? Print Done Data Table Year Plan Alpha Plan Beta 1 1,700,000 $ 1,700,000 2 1,700,000 2,400,000 1,700,000 3,100,000 4 1,700,000 2,400,000 1,700,000 1,700,000 6 1,700,000 1,600,000 1,700,000 1,300,000 8 1,700,000 1,000,000 9 1,700,000 700,000…