Consider the following cash flows:YearProject A Project B($200,0000)($95,000)1$100,000 $20,00023456$125,000 $27,000$55,000 $26,000$25,00056$24,000$23,000Question 1:Find the NPV of each project at 9% discount rate using replacement chain analysisand comment on each of the project.

Step 1: Calculate the NPV of each project Step 2: Use Replacement Chain Analysis to calculate the…

Answered: Consider the following cash flows: Year…

Principles of Accounting Volume 2

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ISBN:9781947172609

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Chapter11: Capital Budgeting Decisions

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Problem 16EA: Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in...

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Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects’ NPVs, IRRs, MIRRs, and PIs, assuming a cost of capital of 12%. Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should actually be selected?
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.
Consider the following cash flows: Year Project A Project B ($200,000 0 ($95,000) 1 $100,000 $20,000 2 $125,000 $27,000 3 $55,000 $26,000 4 $25,000 5 6 $24,000 $23,000 Question 1: Find the NPV of each project at 9% discount rate using replacement chain analysis and comment on each of the project.
A project has the following cash flows set out below. What is the profitability index of this project if the relevant discount rate is 2 percent? Enter your final answer to two decimal places. Year Cash flow 0 -1,745 1 537 2 2,066 3 3,912
The following table contains the estimated cash flows of a project. Assume the appropriate discount rate (hurdle rate) is 14%. Answer the following questions: Year Operating Cash Flow 0 -$20,000 1 $7,000 2 $8,000 3 $9,000 4 $4,000 b. What is the NPV of project 1?
The following table contains the estimated cash flows of a project. Assume the appropriate discount rate (hurdle rate) is 14%. Answer the following questions: Year Operating Cash Flow 0 -$20,000 1 $7,000 2 $8,000 3 $9,000 4 $4,000 c. What is the IRR of project 1?
Calculate the payback period, the discounted payback period and the NPV for the following project using a rate of 5%. Time Cash Flow 0 - $63,000 $ 21,000 $ 21,000 $ 21,000 $ 21,000 Payback = Discounted Payback =
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Most Company has an opportunity to invest in one of two new projects. Project Y requires a $350,000 investment for new machinery with a four-year life and no salvage value. Project Z requires a $350,000 investment for new machinery with a three-year life and no salvage value. The two projects yield the following predicted annual results. The company uses straight-line depreciation, and cash flows occur evenly throughout each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project Y Project z $350,000 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses Total expenses $280,000 49,000 70,000 126,000 25,000 270,000 80,000 24,000 35,000 42,000 126,000 25,000 228,000 52,000 15,600 Pretax income Income taxes (30%) Net income $56,000 $ 36,400
Calculate the payback period, the discounted payback period and the NPV for the following project using a rate of 5%. Time Cash Flow 0 - $53,000 1 $ 21,000 2 $ 21,000 3 $ 21,000 NPV = Payback = Discounted Payback =
Calculate/estimate the IRR(s) for a 6-year project with the following cash flows: CF0 = -50, CF1 =28 = CF2 = CF3 = CF4 = CF5, and CF6 = -93. In Excel, plot the NPV (= Y axis) against r (= discountrate), using r = 0%, 2%, and so on until you find all IRRs in the chart. Identify/estimate all IRRs.
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Consider the following cash flows: Year Project A Project B ($200,000 0 ) ($95,000) 1 $100,000 $20,000 23456 $125,000 $27,000 $55,000 $26,000 $25,000 5 6 $24,000 $23,000 Question 1: Find the NPV of each project at 9% discount rate using replacement chain analysis and comment on each of the project.