Calculate Discounted Payback period and suggest which one is better if the discounting factor is 10% and tax rate 30%. Show in detail relevant calculations and use Straight Line Method of Depreciation

Q: Required: a. Determine the discounted rate of return.

A: Formula: Discount rate= Lower Rate +Lower NPV×Higher Rate-Lower RateLower NPV-Higher NPV

Q: A project has the following net profit after tax set out below. The average book value of the assets…

A: ARR is one of the capital budgeting tools that can be used by an investor to evaluate a proposed…

Q: Payback Period and Accounting Rate of Return: Equal Annual Operating Cash Flows with Disinvestment…

A: Payback Period The term "payback time" refers to the amount of years needed to recoup the initial…

Q: Project A has NPV = + $2,000, IRR = 12% and discounted payback period of 3 years. Project B has NPV…

A: The objective of the question is to determine which project should be approved first by the board of…

Q: A project has the following cash flows: Year ON 3 2 Project Cash Flows -$5,987.00 $2,456.00…

A: YearCash flow0-$5,987.001$2,456.002$2,456.003$2,456.004$2,456.00Cost of capital = 10%

Q: Complete the projected income statement for the first five years of the project. Fill in the…

A: Income Statement The purpose of preparing the income statement is to know the net income which are…

Q: Determine the capitalized cost of an alternative that has a first cost of $55,000 an annual…

A: First cost = $ 55000 Annual cost = $ 12000 Cost every 5 years = $ 20,000 Annual interest rate = 11%

Q: ABC limited company looking to invest in one of the Project cost that project is $50,000 and cash…

A: Profitibaility index = Present value of cash flows/Initial Investmnent IRR is the discount rate…

Q: Given the data in the following table, what is the IRR of Project B? 4 $170 $190 0 -$600 -$520 1…

A: To find the Equivalent Annual Series (EAS) for Project A, we need to convert the uneven cash flows…

Q: machinery costing $420,000. The Sisyphean Company expects cash inflows from this project as detailed…

A: Years Cash Inflow / Outflow PV Factor @ 17% PV of Cashflows 0            -4,20,000.00…

Q: Cash Payback Period A project has estimated annual net cash flows of $22,500. It is estimated to…

A: CASH PAYBACK PERIOD : IT MEANS THAT THE EXPECTED PERIOD OF TIME BETWEEN THE DATE OF INVESTMENT , AND…

Q: machinery costing $420,000. The Sisyphean Company expects cash inflows from this project as detailed…

A: Net present value method : It is defined as the difference between the present value of cash inflows…

Q: Internal Rate of Return A project is estimated to cost $358,020 and provide annual net cash flows of…

A: The actual rate of return provided by an investment is referred to as the Internal rate of return.…

Q: What is the 5-year Benefit-Cost-Ratio (BCR) at 5% interest rate for an equipment project with the…

A: The advantages to the company from a certain initiative, investment, or decision exceed the…

Q: roject A has an initial investment of Rs. 19 lakhs and projected cash inflows of Rs. 5,00,000 for 5…

A: Is the period required to recover initial amount of investment in the project and do not consider…

Q: Lee Enterprises accepts capital investment projects with a payback period of five years or less.…

A: Payback period refers to the time period that is required to recover the initial cost. With the help…

Q: Evaluate the two alternatives A and B and decide the economic justified alternative using: Present…

A: Investment appraisal is the branch of financial management which deals with evaluating potential…

Q: a. What are the NPWS of Projects I, II, III and IV with interest rate 15% compounded quarterly and…

A: Net Present worth is sum total of present values of cash flows of an Investment. One should go with…

Q: etermine the capitalized cost of $100,000 now and $50,000 per year in years 1 through infinity at…

A: Capitalized cost refers to the present worth of cash flows which go on for an infinite period of…

Q: Compute the discounted payback statistic for Project C if the appropriate cost of capital is 7…

A: YearCash flows Present value @7%Cumulative cash…

Q: Which of the two alternatives based on future worth method of comparison should be selected?…

A: Future worth method computes the future value of the project or alternative available. Future worth…

Q: Cash Payback Period A project has estimated annual net cash flows of $46,500. It is estimated to…

A: Payback period refers to the time period that is required to recover the initial cost. With the help…

Q: Basic Present Value Concepts Annual cash inflows that will arise from two competing investment…

A: Cash inflows: The amount of cash received by a company from the operating, investing, and financing…

Q: Calculate the discounted payback period for the following project: ICO: $45,000 WACC: 7% year ANOCFt…

A:

Q: Determine (a) the net present value of the project and (b) the present value index. If required, use…

A: This pertains to time value of money. Net present value is the sum of all present values of the cash…

Q: Project A  Cost $364,000 and offeres 7 annual net cash inflows of $92,000 The company requires a…

A: Net present value is calculated as the sum of the present value of all the expected cash flows. Cost…

Q: Mr Ali has an option of investing in one project from the proposed three different projects.…

A: Formulas:

Q: HW-Chp-8-1: A company is considering the following projects. If the MARR is 1 % / monthicompounded…

A: Capital budgeting is the process by which a corporation examines potential large projects or…

Q: What is the approximate after-tax IRR on a two-year project for which the first cost is $13,000,…

A: First cost = $13,000Savings in 1st year = $5,000Savings in 2nd year = $10,000Tax rate = 40%

Q: Use the sinking fund formula shown to the right to determine the semiannual payments with 6​%…

A: Present value is the sum of money that must be invested in order to achieve a specific future goal.…

Q: Compute the discounted payback statistic for Project C if the appropriate cost of capital is 8…

A: The question is based on the concept of Financial Management. Discounted payback period is the term…

Q: Internal Rate of Return A project is estimated to cost $350,265 and provide annual net cash flows of…

A: Calculate present value of annuity factor:present value of annuity factor = Project cost / Annual…

Q: Internal Rate of Return Method The internal rate of return method is used by Testerman Construction…

A: IRR is one of most used time value based method of capital budgeting and in this net present value…

Q: At what interest rate the 5-year Benefit-Cost-Ratio (BCR) becomes unity for an equipment project…

A: Benefit-Cost-Ratio refers to the interest rate at which the asset is generating cashflows to the…

Q: From the following information calculate the net present value of the two projects and suggest which…

A: Net Present Value: It is a metric used in capital budgeting to determine the profitability of the…

Q: Compute the discounted payback statistic for Project C if the appropriate cost of capital is 6…

A: Discounted payback is an important capital budgeting metric. It shows the number of years taken to…

Q: A project proposal submitted to you for evaluation follow: Investment, including depreciable assets…

A: The IRR is used to assess the profitability of a potential investment and to compare different…

Q: Calculate NPV of both products (to 1 d.p.) assuming a discount rate of 7%

A: Net Present Value (NPV) represent the difference between the present value of cash inflows and the…

Q: Determine the MIRR using a financing rate of 16% and a reinvestment rate of 20% using the following…

A: Modified internal rate of return is the modern method of capital budgeting that is used to determine…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.