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(c) Compute the net present value using a discount rate of 9%. (If the net present value is negative, use either negative sign preceding the number e.g. -45 or parentheses eg (45). Round answer to O decimal places, e.g. 125 calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net present value $ *** Should the proposal be accepted using this discount rate? ✓the proposal. eTextbook and Media Save for Later

(c) Compute the net present value using a discount rate of 9%. (If the net present value is negative, use either negative sign preceding the number e.g. -45 or parentheses eg (45). Round answer to O decimal places, e.g. 125 calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net present value $ *** Should the proposal be accepted using this discount rate? ✓the proposal. eTextbook and Media Save for Later

Essentials Of Investments
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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(c) Compute the net present value using a discount rate of 9%. (If the net present value is negative, use either c negative sign preceding the number e.g. -45 or parentheses eg (45). Round answer to 0 decimal places, e.g. 125 calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net present value B Should the proposal be accepted using this discount rate? LA the proposal. eTextbook and Media Save for Later MacBook Pro Attempts: 0 of 3 used + Submit A
Transcribed Image Text:(c) Compute the net present value using a discount rate of 9%. (If the net present value is negative, use either c negative sign preceding the number e.g. -45 or parentheses eg (45). Round answer to 0 decimal places, e.g. 125 calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net present value B Should the proposal be accepted using this discount rate? LA the proposal. eTextbook and Media Save for Later MacBook Pro Attempts: 0 of 3 used + Submit A
Current Attempt in Progress 2 A company that manufactures recreational pedal boats has approached Matthew Cichanowski to ask if he would be interested in using Current Designs' rotomold expertise and equipment to produce some of the pedal boat components. Matthew is intrigued by the idea and thinks it would be an interesting way of complementing the present product line. One of Matthew's hesitations about the proposal is that the pedal boats are a different shape than the kayaks that Current Designs produces. As a result, the company would need to buy an additional rotomold oven in order to produce the pedal boat components. This project clearly involves risks, and Matthew wants to make sure that the returns justify the risks. In this case, since this is a new venture, Matthew thinks that a 15% discount rate is appropriate to use to evaluate the project. As an intern at Current Designs, Matthew has asked you to prepare an initial evaluation of this proposal. To aid in your analysis, he has ided the following information and assumptions. W 1. 2. The new rotomold oven will have a cost of $261,000, a salvage value of $0, and an 8-year useful life. Straight-line depreciation will be used. The projected revenues, costs, and results for each of the 8 years of this project are as follows. Sales Less: Manufacturing costs Depreciation Shipping and administrative costs 3 E $ 4 R $145,400 % 5 32,625 21,000 T $225,400 6 199,025 MacBook Pro Y & 7 U * 00 8 1 9 O 0 P
Transcribed Image Text:Current Attempt in Progress 2 A company that manufactures recreational pedal boats has approached Matthew Cichanowski to ask if he would be interested in using Current Designs' rotomold expertise and equipment to produce some of the pedal boat components. Matthew is intrigued by the idea and thinks it would be an interesting way of complementing the present product line. One of Matthew's hesitations about the proposal is that the pedal boats are a different shape than the kayaks that Current Designs produces. As a result, the company would need to buy an additional rotomold oven in order to produce the pedal boat components. This project clearly involves risks, and Matthew wants to make sure that the returns justify the risks. In this case, since this is a new venture, Matthew thinks that a 15% discount rate is appropriate to use to evaluate the project. As an intern at Current Designs, Matthew has asked you to prepare an initial evaluation of this proposal. To aid in your analysis, he has ided the following information and assumptions. W 1. 2. The new rotomold oven will have a cost of $261,000, a salvage value of $0, and an 8-year useful life. Straight-line depreciation will be used. The projected revenues, costs, and results for each of the 8 years of this project are as follows. Sales Less: Manufacturing costs Depreciation Shipping and administrative costs 3 E $ 4 R $145,400 % 5 32,625 21,000 T $225,400 6 199,025 MacBook Pro Y & 7 U * 00 8 1 9 O 0 P
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