Stellan Manufacturing is considering the following two investment proposals:Proposal XProposal Y$510,0004 yearsInvestmentUseful lifeEstimated annual net cash inflows received atthe end of each yearResidual valueDepreciation methodAnnual discount rate12455 N.Compute the present value of the future cash inflows from Proposal Y.Present value of an ordinary annuity of $1:8%9%10%2360.9261.7832.5773.3123.9934.623OA. $255,000OB. $295,800OC. $317,520OD. $272,0850.9171.7592.5313.2403.8094.486$732,0005 years0.9091.7362.4873.1703.7914.355$164,000$68,000Straight-line Straight-line10%$98,000$0...9%

The question is related to Capital Budgeting.The Present Value of future cash inflows are calculated…

Cellan Manufacturing is considering the following two investment proposals: Proposal Y Proposal X $732,000 5 years nvestment Useful life Estimated annual net cash inflows received at he end of each year Residual value Depreciation method Annual discount rate 1 2 3 4 Compute the present value of the future cash inflows from Proposal Y. Present value of an ordinary annuity of $1: 8% 9% 10% 5 6 0.926 1.783 2.577 3.312 3.993 4.623 A. $255,000 OB. $295,800 OC. $317,520 O D. $272,085 0.917 1.759 2.531 3.240 3.809 4.486 $164,000 $68,000 Straight-line 0.909 1.736 2.487 3.170 3.791 4.355 10% ... $510,000 4 years $98,000 $0 Straight-line 9%

Cellan Manufacturing is considering the following two investment proposals: Proposal Y Proposal X $732,000 5 years nvestment Useful life Estimated annual net cash inflows received at he end of each year Residual value Depreciation method Annual discount rate 1 2 3 4 Compute the present value of the future cash inflows from Proposal Y. Present value of an ordinary annuity of $1: 8% 9% 10% 5 6 0.926 1.783 2.577 3.312 3.993 4.623 A. $255,000 OB. $295,800 OC. $317,520 O D. $272,085 0.917 1.759 2.531 3.240 3.809 4.486 $164,000 $68,000 Straight-line 0.909 1.736 2.487 3.170 3.791 4.355 10% ... $510,000 4 years $98,000 $0 Straight-line 9%

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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Problem 6. Including loan The following investment alternatives are being evaluated. Assuming that there is only $30,000 available and the surplus will be acquired through a loan at 5.5% annual effective interest payable in annual payments over 4 years. Determine which alternative should be selected. Perform the analysis using the Present Value, Equivalent Annuity and IRR Methods. Use a MARR = 7% Year A B 0 -25000 -46000 1 7460 16640 2 7460 16640 3 7460 16640 4 6500 12600 5 6000 10600
Net Present Value A project has estimated annual net cash flows of $7,500 for three years and is estimated to cost $45,000. Assume a minimum acceptable rate of return of 10%. Use the Present Value of an Annuity of $1 at Compound Interest table below. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 Determine (a) the net present value of the project and (b) the present value index. If required, use the minus sign to indicate a negative net present value. Net present value of the project (round to the nearest dollar) Present value index (rounded to two decimal places)
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Net Present Value A project has estimated annual net cash flows of $13,750 for three years and is estimated to cost $30,000. Assume a minimum acceptable rate of return of 15%. Use the Present Value of an Annuity of $1 at Compound Interest table below. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 Determine (a) the net present value of the project and (b) the present value index. If required, use the minus sign to indicate a negative net present value. Net present value of the project (round to the nearest dollar) Present value index (rounded to two decimal places)
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