Britney Javelin Company is considering two investments, both of which cost $26,000. The cash flows are as follows: Use Appendix B and Appendix D Year Project A Project B Project A $10,000 14,000 8,000 a. Calculate the payback period for project A and project B. (Round the final answers to 2 decimal places) Payback period years years: Project B $9,000 14,000 13,000 Project A Project B b-1. Calculate the NPV for project A and project B. Assume a cost of capital of 9 percent. (Round "PV Factor" to 3 decimal places. Round the intermediate and final answers to the nearest whole dollar) D Net present value $

Britney Javelin Company is considering two investments, both of which cost $26,000. The cash flows are as follows: Use Appendix B and Appendix D Year Project A Project B Project A $10,000 14,000 8,000 a. Calculate the payback period for project A and project B. (Round the final answers to 2 decimal places) Payback period years years: Project B $9,000 14,000 13,000 Project A Project B b-1. Calculate the NPV for project A and project B. Assume a cost of capital of 9 percent. (Round "PV Factor" to 3 decimal places. Round the intermediate and final answers to the nearest whole dollar) D Net present value $

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 22E

See similar textbooks

Similar questions

Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in year two, $2,000 in year three. $2,500 in year four, and $2,000 in year five. What is the NPV using 8% as the discount rate? For further instructions on net present value in Excel, see Appendix C.
Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?
Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and provide the following cash flows over the next five years: $88,000, 92,000, $91,000, $72,000, and $71,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel, see Appendix C.
Assume a company is going to make an investment of $450,000 in a machine and the following are the cash flows that two different products would bring in years one through four. Which of the two options would you choose based on the payback method?
There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows: Use the information from the previous exercise to calculate the internal rate of return on both projects and make a recommendation on which one to accept. For further instructions on internal rate of return in Excel, see Appendix C.
X-treme Vitamin Company is considering two investments, both of which cost $20,000. The cash flows are as follows: Year Project A Project B 1 $ 23,000 $ 20,000 2 10,000 9,000 3 10,000 15,000 Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a-1. Calculate the payback period for Project A and Project B. (Round your answers to 2 decimal places.) project A 0.87 years project B 1 year b-1. Calculate the net present value for Project A and Project B. Assume a cost of capital of 8 percent. (Do not round intermediate calculations and round your final answers to 2 decimal places.)
X-treme Vitamin Company is considering two investments, both of which cost $10,000. The cash flows are as follows: Year Project A Project B 1 $ 12,000 $ 10,000 2 8,000 6,000 3 6,000 16,000 Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a-1. Calculate the payback period for Project A and Project B. b-1. Calculate the net present value for Project A and Project B. Assume a cost of capital of 10 percent.
X-treme Vitamin Company is considering two investments, both of which cost $34,000. The cash flows are as follows: $ 36,000 Project B $ 34,000 16,000 18,000 16,000 10,000 Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a-1. Calculate the payback period for Project A and Project B. Note: Round your answers to 2 decimal places. Year Project A 1 2 3 Project A Project B a-2. Which of the two projects should be chosen based on the payback method? Project A O Project B Payback Period year(s) year(s) b-1. Calculate the net present value for Project A and Project B. Assume a cost of capital of 12 percent. Note: Do not round intermediate calculations and round your final answers to 2 decimal places. Project A Project B Net Present Value
X-treme Vitamin Company is considering two Investments, both of which cost $14,000. The cash flows are as follows: Tear Project A Project B $16,000 $14,000 5,000 9,000 2 3 6.000 4,000 Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a-1. Calculate the payback period for Project A and Project B. (Round your answers to 2 decimal places.) Project A Project B Payback Period year(s) year(s) a-2. Which of the two projects should be chosen based on the payback method? O Project A O Project B b-1. Calculate the net present value for Project A and Project B. Assume a cost of capital of 8 percent. (Do not round intermediate calculations and round your final answers to 2 decimal places.) Project A Project B Net Present Value
X-treme Vitamin Company is considering two investments, both of which cost $34,000. The cash flows are as follows: Year / Project A / Project B Year 1: Project A: $36,000 / Project B: $34,000 Year 2: Project A: $16,000 / Project B: $16,000 Year 3: Project A: $10,000 / Project B: $18,000 What is the payback period for Project A and Project B?
X-treme Vitamin Company is considering two investments, both of which cost $10,000. The cash flows are as follows: NOTE: you must show your work for ALL steps for full credit. Year Proj A Proj B 1 $ 12,000.00 $10,000.00 2 $8,000.00 $6,000.00 3 $ 6,000.00 $16,000.00 a. Which of the two projects should be chosen based on the payback method b. Which of the two projects should be chosen based on the net present value method? Assume a cost of capital of 10 percent. c. Should a firm normally have more confidence in answer a or answer b.
Beyer Company is considering buying an asset for $270,000. It is expected to produce the following net cash flows. Year Year 1 $66,000 Initial investment Year 1 Year 2 Year 3 Year 4 Year 5 Total Net Cash Flows Net cash flows Compute the payback period for this Investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Perlod answer to 2 decimal places.) $ (270,000) Year 2 $39,000 Payback period = Year 3 $67,000 Cumulative Cash Flows Year 4 $200,000 Year 5 $22,000