Eve Industries is deciding whether to automate one phase of its production process. The manufacturing equipment has a six-year life and will cost $930,000. Projected net cash inflows are as follows:(Click the icon to view the projected net cash inflows.)(Click the icon to view Present Value of $1 table.)Read the requirements.Requirement 1. Compute this project's NPV using Eve's 14% hurdle rate. Should Eve invest in the equipment?Use the following table to calculate the net present value of the project. (Enter any factor amounts to three decimal places, X.XXX.PV Factor (i= 14%)YearsYear 1Year 2Year 3Year 4Year 5Year 6Present value of each year's inflow: (n = 1)Present value of each year's inflow: (n = 2)Present value of each year's inflow: (n = 3)Present value of each year's inflow: (n=4)Present value of each year's inflow: (n = 5)Present value of each year's inflow: (n = 6)Total PV of cash inflowsYear 0 Initial investmentNet present value of the projectexampleData tableYear 1Year 2Year 3Year 4Year 5Year 6PrintGet more help.$262,000254,000224,000212,000204,000173,000(Click the icon to view Present Value of Ordinary Annuity of $1 table.)DoneNet CashInflowPresent ValueReferencePeriodsPeriod 1Period 2Period 3Period 4Period 5Period 6Period 7Period 8Period 9Period 10Period 11Period 12Period 13Period 14Period 15Period 16Period 17Period 18Period 19Period 20Period 21Period 22Period 23Period 24Period 25Period 26Period 27Period 28Period 29Period 30Period 40Period 50Present Value of Ordinary Annuity of $14% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20%0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.8331.886 1.859 1.833 1.808 1.783 1.759 1.736 1.690 1.647 1.626 1.605 1.566 1.5282.775 2.723 2.67: 2.624 2.577 2.531 2.487 2.403 2.322 2.283 2.246 2.174 2.1063.630 3.546 3.465 3.387 3.312 3.240 3.170 3.037 2.914 2.855 2.798 2.690 2.5894.452 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.352 3.274 3.127 2.9915.795 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.111 3.889 3.784 3.685 3.498 3.3266.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 4.160 4.039 3.812 3.6057.652 7.325 7.020 6.7336.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 4.487 4.344 4.078 3.8378.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.328 4.946 4.772 4.607 4.303 4.0319.471 8.983 8.5308.1117.722 7.360 7.024 6.710 6.418 6.145 5.650 5.216 5.0194.833 4.494 4.19210.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 5.938 5.453 5.234 5.029 4.656 4.32711.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.194 5.660 5.421 5.197 4.793 4.43912.134 11.348 10.635 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.424 5.842 5.583 5.342 4.910 4.53313.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.628 6.002 5.724 5.468 5.008 4.61113.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.061 7.606 6.811 6.142 5.847 5.575 5.092 4.6751% 2%0.990 0.9801.970 1.9422.9412.8843.902 3.8084.853 4.7133%0.9711.9132.8293.7174.58014.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.313 7.824 6.974 6.265 5.954 5.669 5.162 4.73015.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.022 7.120 6.373 6.047 5.749 5.222 4.77516.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.250 6.467 6.128 5.818 5.273 4.81217.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.366 6.550 6.198 5.877 5.316 4,84418.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.469 6.623 6.259 5.929 5.353 4.87018.857 17.011 15.415 14.029 12.821 11.764 10.836 10.017 9.292 8.649 7.562 6.687 6.312 5.973 5.384 4.89119.660 17.658 15.937 14.451 13.163 12.042 11.061 10.201 9.442 8.772 7.645 6.743 6.359 6.011 5.410 4.90920.456 18.292 16.444 14.857 13.489 12.303 11.272 10.371 9.580 8.883 7.718 6.792 6.399 6.044 5.432 4.92521.243 18.914 16.936 15.247 13.799 12.550 11.469 10.529 9.707 8.985 7.784 6.835 6.434 6.073 5.451 4.93722.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.823 9.077 7.843 6.873 6.464 6.097 5.467 4.94822.795 20.121 17.877 15.983 14.375 13.003 11.826 10.810 9.929 9.161 7.896 6.906 6.491 6.118 5.480 4.95623.560 20.707 18.327 16.330 14.643 13.211 11.987 10.935 10.027 9.237 7.943 6.935 6.514 6.136 5.492 4.96424.316 21.281 18.764 16.663 14.898 13.406 12.137 11.051 10.116 9.307 7.984 6.961 6.534 6.152 5.502 4.97025.066 21.844 19.188 16.984 15.141 13.591 12.278 11.158 10.198 9.370 8.022 6.983 6.551 6.166 5.510 4.97525.808 22.396 19.600 17.292 15.372 13.765 12.409 11.258 10.274 9.427 8.055 7.003 6.566 6.177 5.517 4.97932.835 27.355 23.115 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.244 7.105 6.64239.196 31.424 25.730 21.482 18.256 15.762 13.801 12.233 10.962 9.9158.304 7.133 6.661PrintDone6.233 5.548 4.9976.246 5.554 4.999X Eve Industries is deciding whether to automate one phase of its production process. The manufacturing equipment has a six-year life and will cost $930,000. Projected net cash inflows are as follows:(Click the icon to view the projected net cash inflows.)(Click the icon to view Present Value of $1 table.)Read the requirements.Requirement 1. Compute this project's NPV using Eve's 14% hurdle rate. Should Eve invest in the equipment?Use the following table to calculate the net present value of the project. (Enter any factor amounts to three decimal places, X.XXXNet CashInflowPV Factor (i= 14%)YearsYear 1Year 2Year 3Year 4Year 5Year 6Present value of each year's inflow: (n = 1)Present value of each year's inflow: (n = 2)Present value of each year's inflow: (n = 3)Present value of each year's inflow: (n = 4)Present value of each year's inflow: (n = 5)Present value of each year's inflow: (n = 6)Total PV of cash inflowsYear 0 Initial investmentNet present value of the projects exampleRequirements(Click the icon to view Present Value of Ordinary Annuity of $1 table.)1.Compute this project's NPV using Eve's 14% hurdle rate. Should Eve investin the equipment?Get more help.2. Eve could refurbish the equipment at the end of six years for $103,000. Therefurbished equipment could be used one more year, providing $73,000 of netcash inflows in year 7. Additionally, the refurbished equipment would have a$51,000 residual value at the end of year 7. Should Eve invest in theequipment and refurbish it after six years? (Hint: In addition to your answer toRequirement 1, discount the additional cash outflow and inflows back to thepresent value.)PrintPresent ValueDoneXReferencePeriodsPeriod 1Period 2PeriodPeriod 4Period 5Period 6Period 7PeriodPeriod 9Period 10Period 11Period 12Period 13Period 14Period 15Period 16Period 17Period 18Period 19Period 20Period 21Period 22Period 23Period 24Period 25Period 26Period 27Period 28Period 29Period 30Period 40Period 50Present Value of $112% 14% 15% 16% 18% 20%0.961 0.924 0.888 0.855 0.823 0.792 0.7630.951 0.906 0.863 0.822 0.784 0.747 0.7130.942 0.8880.933 0.8710.923 0.8530.914 0.8370.905 0.8200.896 0.804 0.722 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.287 0.237 0.215 0.195 0.162 0.1350.887 0.788 0.701 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.257 0.208 0.187 0.168 0.137 0.1120.879 0.773 0.681 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.229 0.182 0.163 0.145 0.116 0.0930.870 0.758 0.661 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.205 0.160 0.141 0.125 0.099 0.0780.861 0.743 0.642 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.183 0.140 0.123 0.108 0.084 0.0651% 2% 3% 4% 5% 6% 7% 8% 9% 10%0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.8330.980 0.961 0.943 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.797 0.769 0.756 0.743 0.718 0.6940.971 0.942 0.915 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.712 0.675 0.658 0.641 0.609 0.5790.735 0.708 | 0.683 0.636 0.592 0.572 0.552 0.516 0.4820.681 0.650 0.621 0.567 0.519 0.497 0.476 0.437 0.4020.630 0.596 0.564 0.507 0.456 0.432 0.410 0.370 0.3350.583 0.547 0.513 0.452 0.400 0.376 0.354 0.314 0.2790.540 0.502 0.467 0.404 0.351 0.327 0.305 0.266 0.2330.500 0.460 0.424 0.361 0.308 0.284 0.263 0.225 0.1940.463 0.422 0.386 0.322 0.270 0.247 0.227 0.191 0.1620.837 0.790 0.746 0.705 0.6660.813 0.760 0.711 0.665 0.6230.789 0.731 0.677 0.627 0.5820.766 0.703 0.645 0.592 0.5440.744 0.676 0.614 0.558 0.5080.853 0.728 0.623 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.163 0.123 0.107 0.093 0.071 0.0540.844 0.714 0.605 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.146 0.108 0.093 0.080 0.060 0.0450.836 0.700 0.587 0.494 0.416 0.350 0.296 0.250 0.212 0.180 0.130 0.095 0.081 0.069 0.051 0.0380.828 0.686 0.570 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.116 0.083 0.070 0.060 0.043 0.0310.820 0.673 0.554 0.456 0.377 0.312 0.2580.2150.178 0.149 0.104 0.073 0.061 0.051 0.037 0.0260.199 0.164 0.135 0.093 0.064 0.053 0.044 0.031 0.0220.184 0.150 0.123 0.083 0.056 0.046 0.038 0.026 0.0180.170 0.138 0.112 0.074 0.049 0.040 0.033 0.022 0.0150.158 0.126 0.102 0.066 0.043 0.035 0.028 0.019 0.0130.146 0.116 0.092 0.059 0.038 0.030 0.024 0.016 0.0100.811 0.660 0.538 0.439 0.359 0.294 0.2420.803 0.647 0.522 0.422 0.342 0.278 0.2260.795 0.634 0.507 0.406 0.326 0.262 0.2110.788 0.622 0.492 0.390 0.310 0.247 0.1970.780 0.610 0.478 0.375 0.295 0.233 0.1840.772 0.598 0.464 0.361 0.281 0.220 0.172 0.135 0.106 0.084 0.053 0.033 0.026 0.021 0.014 0.0090.764 0.586 0.450 0.347 0.268 0.207 0.161 0.125 0.098 0.076 0.047 0.029 0.023 0.018 0.011 0.0070.757 0.574 0.437 0.333 0.255 0.196 0.150 0.116 0.090 0.069 0.042 0.026 0.020 0.016 0.010 0.0060.749 0.563 0.424 0.321 0.243 0.185 0.141 0.107 0.082 0.063 0.037 0.022 0.017 0.014 0.008 0.0050.742 0.552 0.412 0.308 0.231 0.174 0.131 0.099 0.075 0.057 0.033 0.020 0.015 0.012 0.007 0.0040.672 0.453 0.307 0.208 0.142 0.097 0.067 0.046 0.032 0.022 0.011 0.005 0.004 0.003 0.001 0.0010.021 0.013 0.009 0.003 0.001 0.001 0.0010.608 0.372 0.228 0.141 0.087 0.054 0.034PrintDoneX

Net present value is the sum of present values of all cash flows of a project. Net present value is…

ampla Requirements 1. Compute this project's NPV using Eve's 14% hurdle rate. Should Eve invest in the equipment? 2. Eve could refurbish the equipment at the end of six years for $103,000. The refurbished equipment could be used one more year, providing $73,000 of net cash inflows in year 7. Additionally, the refurbished equipment would have a $51,000 residual value at the end of year 7. Should Eve invest in the equipment and refurbish it after six years? (Hint: In addition to your answer to Requirement 1, discount the additional cash outflow and inflows back to the present value.) Get more help Print - X Done

ampla Requirements 1. Compute this project's NPV using Eve's 14% hurdle rate. Should Eve invest in the equipment? 2. Eve could refurbish the equipment at the end of six years for $103,000. The refurbished equipment could be used one more year, providing $73,000 of net cash inflows in year 7. Additionally, the refurbished equipment would have a $51,000 residual value at the end of year 7. Should Eve invest in the equipment and refurbish it after six years? (Hint: In addition to your answer to Requirement 1, discount the additional cash outflow and inflows back to the present value.) Get more help Print - X Done

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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Similar questions

Machine cost = $15,000; Life = 8 years; salvage value = $3000. What minimum cash return would the investor demand annually from the operation of this machine if he desires interest annually at the rate of 8% in his investment and accumulates a capital replacement fund by investing annual deposits at 5%?
Need a little help with this one
2. (a) You want to set-up a scholarship fund that will support $20000/year for an infinite period. The fund is expected to earn 8% return per year forever. What initial investment is needed to set-up the scholarship fund? Find the value of (P/A,1/2%, ∞). (b) Estimate the depreciation schedule of a machine with an initial cost of $100,000, useful life of 8 years and a salvage value of $30,000. Use the double declining balance method to develop the depreciation schedule.
You are responsible to manage an IS project with a 4-year horizon. The annal cost of the project is estimated at $40,000 per year, and a one-time costs of $120,000. The annual monetary benefit of the project is estimated at $96,000 per year with a discount rate of 6 percent. a. Calculate the overall return on investment (ROI) of the project. b. Perform a break-even analysis (BEA). At what year does break-even occur?
A.) ABC inc. is considering investing in a new project with an initial cost of $500,000. The project is expected to generate cash flows of $100,000 per year for hte next fire years. After five years, the project will have a residual value of $50,000. Calculate the accounting rate of retrn (ARR) for this investment. B.) Given that the calculated ARR for this investment is 18% provide a critical analysis of whether ABC Inc. Should proceed with this project. Consider the strengths and weaknesses of using ARR as an investment appraisal method and discuss any other financial and non financial factors that ABC Inc. should take into account when making this investment decision.
I need help solving this problem
Investment Criteria. What is the NPV of a project that costs $250,000 and provides cash inflows of $50,000 annually for ten years and the discount rate is 10 percent? Should the project be accepted? Please show your work
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You are evaluating purchasing the rights to a project that will generate after tax expected operating cash flows of $91k at the end of each of the next five years, plus an additional $1,000k non-operating terminal period cash flow at the end of the fifth year. You can purchase this project for $531k. If your firm's cost of capital (aka required rate of return) is 14.3%, what is the NPV of this project? Note: All dollar values are given in units of $1k = $1000. Provide your answer in units of $1000, thus, $15000 = 15k and thus you should enter 15 for your answer.
Vijay
Fossa Road Paving Corporation is considering an investment in a curb-forming machine. The machine will cost $240,000, will last 10 years, and will have a $40,000 salvage value at the end of 10 years. The machine is expected to generate net cash inflows of $60,000 per year in each of the 10 years. Fossa's discount rate is 18%. The net present value of the proposed investment is closest to (Ignore income taxes.): Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. Multiple Choice $69,640 $37,280 $(48,780) $5,840
) A company requires an initial investment of $75,000 with a residual value of $12,500 after five years. The estimated annual returns over the five years are $20,000 at 12% compounded annually. What is the net present value of this project? ____________ b. What is the project’s internal rate of return (IRR)? __________

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