Undo17PasteYear(1Clipboard01234BCalibriOption A,Product AB V-4000008.71%AProblem 1 of 3Assume a company is going to make an investment of $400,000 in a machine and the followingare the cash flows that two different products would bring in years one through four. For eachof the two options calculate the payback, IRR, and NPV. Assume that you require a 10% rateof return on all investments. To complete the NPV calculation you will need to add the initialinvestment in year zero (hint: Excel expects investments/outflows of cash as negative numbersand inflows of cash as positive numbers). Record your responses in the grey cells below(show your work in calculations).210,000190,00050,00010,000CFontOption B,Product B-400000160,000170,00070,000100,000DEAlignmentFGPercentageHNumb

Payback period is the total period in which a company can recover its total cost or expenses which…

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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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Single Cash Flow Present Value Inputs Single Cash Flow $1,000 Discount Rate/Period 6% Number of Periods 5 Present Value using a Time Line Period 1 2 3 4 Cash Flows Present Value of Each Cash Flow Present Value Present Value using the Formula Present Value Present Value using the PV Function Present Value
d. Determine the minimum annual net cash flow necessary to generate a positive net present value, assuming a desired rate of return of 12%. Round to the nearest dollar.Annual Net Cash Flow fill in the blank 1 of 1$
2. Discounted Payback (DCPB) and IRR evaluations. Use the cash flow situation (table below) to answer. a. Determine the DCPB based on a MARR rate of 4.0% b. Determine the IRR Year Cash Flow (in $1000's) 0 -1250 1 +350 2 3 +300 +250 4 +200 5 +150 6 +100 7 +50
Consider the following future value problem. The respective cash flows for t = 0, 1, 2, and 3 are $3,000, $2,000, $8,000, and $5,000 and the discount rate is ten percent. What is the future value at t = 4? do not use excel
This graph shows the net present value of an investment with annual cash flows of -$1,000, $100, $300, $400, and $675 as a function of different costs of capital (interest %). Note that this cash flow returns increasing amounts after the initial investment. Drag left or right on the graph to move the cursors to see the net present value (NPV) for different costs of capital. The point where the curve crosses the X-axis determines the internal rate of return (IRR). (Note: due to limited pixel resolution, it is sometimes difficult to get to that precise point.)
You are evaluating five different investments, all of which involve an upfront outlay of cash. Each investment will provide a single cash payment back to you in the future. Details of each investment appears here:. Calculate the IRR of each investment. State your answer to the nearest basis point (i.e., the nearest 1/100th of 1%, such as 3.76%). The yield for investment A is %. (Round to two decimal places.) Initial Future Investment Investment Value Im A $1,900 $4,029 B $9,600 $13,121 C $500 D $3,200 E $5,900 Data table $1,759 $4,139 $9,079 End of Year 11 9 18 3 12 I X
A product manager prepared the following forecasts for a product line: 1 3 4 5 6 and later 2 + $2m $2m $3m $4m $4m g=2.5% If the appropriate discount rate is 8.5%, what is the present value of these future cash flows?
Average Rate of Return, Cash Payback Period, Net Present Value Method for a Service Company Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost of $176,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of $44,000. The company's minimum desired rate of return for net present value analysis is 12%. Present Value of an Annuity of $1 at Compound Interest 15% Year 6% 10% 12% 20% 1 0.943 0.909 0.893 0.870 0.833 1.736 2 1.833 1.690 1.626 1.528 2.673 2.283 2.487 2.402 2.106 4 3.465 3.170 3.037 2.855 2.589 3.605 3.353 5 4.212 3.791 2.991 3.785 4.917 4.355 4.111 3.326 3.605 7 5.582 4.868 4.564 4.160 6.210 4.968 4.487 3.837 8 5.335 6.802 5.759 5.328 4.772 4.031 6.145 5.650 5.019 10 7.360 4.192 Compute the following:

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are the cash flows that two different products would bring in years one through four. For each of the two options calculate the payback, IRR, and NPV. Assume that you require a 10% rate