**Project Evaluation and Present Value Calculation**Beene Distributing is evaluating a project that promises an annual return of $270,000 at the end of each year for six years. With a required annual return of 10%, Beene seeks to determine the maximum amount it should invest in this project right now. To find this, the calculation involves Present Value (PV) of an Ordinary Annuity using appropriate factors.### Calculation Method:1. **Periodic Cash Flow** - Amount: $270,000 2. **Present Value Factor (PVF) of an Ordinary Annuity** - Use provided tables to find the factor corresponding to 10% over six years.3. **Present Value Calculation** - Formula: Periodic Cash Flow × PVF = Present Value - Round the PV factor to four decimal places and the final present value to the nearest whole dollar.These calculations help determine the present value of future cash flows, guiding investment decisions.

Cash flow refers the amount of cash and cash equivalent which the company receives or gives out by…

Answered: Beene Distributing is considering a…

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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Use the NPV method to determine whether Rouse Products should invest in the following projects: • Project A costs $270,000 and offers seven annual net cash inflows of $64,000. Rouse Products requires an annual return of 14% on projects like A. • Project B costs $395,000 and offers ten annual net cash inflows of $72,000. Rouse Products demands an annual return of 12% ch investments of this nature. (Click the icon to view the present value annuity table.) (Click the icon to view the present value table.) (Click the icon to view the future value annuity table.) (Click the icon to view the future value table.) Requirement What is the NPV of each project? What is the maximum acceptable price to pay for each project? Calculate the NPV of each project. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for negative net present values.) The NPV of Project A is
You are evaluating a project that will cost $500,000 but is expected to produce cash flows of $125,000 per year for 10 years, with the first cash flow in one year. Your cost of capital is 11% and your company's preferred payback period is three years or less. What is the payback period of this project? The payback period is ____ years. (Round to two decimal places)
The James Company is considering an investment with a cost today of $1,500,000 and which will produce the following net inflows: Year 1 600,000 Year 2 300,000 Year 3 200,000 Year 4 400,000 Year 5 500,000 What is the Payback Period for the investment?
You have the choice to invest in a related project at time T+1. The required investment is $10 million, but will generate $1 million per year in the next ten years starting from time T+1. Using a rate of 8%, calculate the present value of the new project at time T.
Dried Inc. is evaluating the feasibility of a construction project. Construction would require an initial payment of $320,000 today, $160,000 one year from now, and $45,000 two years from now. Net returns of $80,000 are expected every year and the project would be sold for $450,000 after 10 years. Compute the NPV and determine if the project is feasible if the cost of capital is 12%. please sove this sum asap
Consider two investment projects, both of which require an upfront investment of $10 million and pay a constant positive amount each year for the next 12 years. Under what conditions can you rank these projects by comparing their IRRS? (Select the best choice below.) A. Ranking by IRR will work in this case so long as the projects' cash flows do not decrease from year to year. B. Ranking by IRR will work in this case so long as the projects' cash flows do not increase from year to year. C. Ranking by IRR will work in this case so long as the projects have the same risk. D. There are no conditions under which you can use the IRR to rank projects.
Raymond has two one-year projects for potential investment and each project has a cost of $10 million. After one year, the two projects will provide the following payoffs: Project A Successful (60% probability): $12 million Not successful (40% probability): $9 million Project B Successful (40% probability): $15 million Not successful (60% probability): $8 million (i) What is the expected payoff and risk (standard deviation of payoff) of these two projects? (ii) Based on your answers in part (i), explain which is the good project and which is the bad project. Raymond is seeking a $10 million loan from his friend Betty for investing in either one of the above projects with the following loan features: (1) If the project is successful, Raymond will receive the payoff from the project, and he will also pay Betty $10 million plus interest. (2) If the project is not successful,…
What is n= , and the net present value
You're considering a project that will cost $191,730, you anticipate the project will return $78,388 the first year, $88,530 the second year, $70,089 the third year and $64,251 the fourth year. If you need 6% return on any project, what is the net present value of this opportunity?
You are considering investing in a project that has an initial cost of $18,000, a WACC of 15%, with the estimated net cashflows for years 1, 2, 3 being equal to $20,000, $ 10,000, $6,000. Would you accept this project? _____________, Why?
Consider an investment project in which you invest $3,500 today in order to receive $525 at the end of each of the next 10 years. If the cost of capital is 12% per year, what is the IRR and should the project be accepted? 7.23%, accept project 7.23%, reject project 5.28%, accept project 5.28%, reject project 8.14%, reject project 8.14%, accept project a. b. C. d. e. O f.
CII, Incorporated, invests $700,000 in a project expected to earn a 9% annual rate of return. The earnings will be reinvested in the project each year until the entire investment is liquidated 11 years later. What will the cash proceeds be when the project is liquidated? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your "FV of a single amount" to 4 decimal places and final answer to the nearest whole dollar.) Present Value X f (FV of a Single Amount) Future Value

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