Brans Co. is considering a $270,000 investment, which will provide net returns of $110,000, $140,000,and $220,000 in the second, third, and fourth yearS, respectively.The company has a payback rule of 3 years. Should the company undertake the investment?Use the following table:Cumulative CashFlowCashCashNet CashYearOutflowInflowFlowa. NoO b. Yes

Payback period: The payback period is the minimum period of time in which an initial investment of…

Answered: Brans Co. is considering a $270,000…

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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Blossom Company accumulates the following data concerning a proposed capital investment: cash cost $217,280, net annual cash flows $44,000, and present value factor of cash inflows for 10 years is 5.22 (rounded). (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45).) Determine the net present value, and indicate whether the investment should be made. Net present value 24 The investment be made.
Jiminez Company has two investment opportunities. Both investments cost $5,000 and will provide the following net cash flows: Year 1 2 3 4 What is the total present value of Investment A's cash flows assuming an 10% minimum rate of return? Use Appendix Table 2. (Do not round your intermediate calculations. Round your answer to the nearest whole dollar.) Multiple Choice O O Investment A $3,000 3,000 3,000 3,000 O O $4,510. $3,452. $3,000. Investment B $3,000 4,000 2,000 1,000 $10,628.
s
Dalvi Incorporated is considering a new Investment. The table below lists the cash flows. Year Cash Flows -$25,400 1 $6,300 2 $7,700 3 $11,400 Calculate the Payback period Calculate the NPV and IRR. Assume that the interest rate is 0%.
The Upfront Company has invested RM 123,000 on fully computerized equipment with an operation and maintenance cost of RM 7,800 per year, life span of five (5) years, and residual value of RM 9,000. The production has generated an income of RM 40,000 per year. Calculate the actual worth of the investment if the MARR is 12% per year. Illustrate with a proper cash flow diagram.
c. A company is planning to invest in a project over a 5-year period, but wants to know its financial implications. It expects the cash in-flow return on the investment to steadily increase over the 5 years. Using the information below, help determine the Total Net Cash Flows, the Net Present Value and the estimated Payback Period. Note: Estimate the payback period to the nearest year. Discount Rate 12% Investment Project Initial Investment Year 1 Year 2 Year 3 Year 4 Year 5 Cash Flow $ $ $ $ $ $ Total Net Cash Flow (5,000) 800 ? 900 ? 1,500 ? 1,800 ? 3,200 NPV of investment Estimated Payback Period
Regarding the proposed investments, XYZ INC. gathers the following data: a cash cost of 13,000, net annual cash flows of 45,000, and a present value factor of 5.40 rounded for cash inflows over a ten-year period. Find out all the relevant details that will be important when choosing an investment. Please let me know whether you think our firm should receive an investment based on the following information:
Answer the question correctly. 7.
Munabhai
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P.nilesh

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