Assume that a company Is consideringa capital Investment project with a four-year time horizon and the following cash flows:Cost of new equipmentWorking capital requiredAnnual net cash inflowsMaintenance and repairs in third yearSalvage value of equipment in fourth year$ 210,000$ 50,000$ 100,000$40,000$ 35,000Click here to vlew Exhlbit 14B-1 and Exhibit 14B-2, to determine the approprlate discount factor(s) using the tables provided.The working capital will be released at the end of the project and the company's required rate of return Is 17%. The net present value of the project Is closest to:Multiple Choice$34,830.$44.730.$(30,530).$60.730.

Net present value can be found out by difference between present value of cash flow and initial…

Cost of new equipment dorking capital required Annual net cash inflows Maintenance and repairs in third year Salvage value of equipment in fourth year $ 210,000 $ 50,000 $ 100,000 $ 40,000 $ 35,000 ck here to vlew Exhibit 14B-1 and Exhibit 14B-2, to determine the approprlate discount factor(s) using the tables provide e working capital will be released at the end of the project and the company's required rate of return Is 17%. The net pr Multiple Choice $34,830.

Cost of new equipment dorking capital required Annual net cash inflows Maintenance and repairs in third year Salvage value of equipment in fourth year $ 210,000 $ 50,000 $ 100,000 $ 40,000 $ 35,000 ck here to vlew Exhibit 14B-1 and Exhibit 14B-2, to determine the approprlate discount factor(s) using the tables provide e working capital will be released at the end of the project and the company's required rate of return Is 17%. The net pr Multiple Choice $34,830.

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

See similar textbooks

Similar questions

The information below relates to the purchase of equipment: investment in the project: $10,000 Net annual cash inflows: 2,400 Working capital required: 5,000 Salvage value of the equipment: 1,000 Life of the project: 8 years At the completion of the project, the working capital will be released for use elsewhere. Compute the net present value of the project, using a discount rate of 10% $606 $8,271 ($1,729) $1,729
please detail solution and explnation
Input area: Initial investment Pretax salvage value Cost savings per year Cost savings per year $ Working capital reduction Annual depreciation charge Aftertax salvage value 69 69 69 SA SA SA SA $ 535,000 $ 30,000 $ 150,000 100,000 $ 60,000 $ 107,000 $ 22,800 Tax rate Required return *Depreciation straight-line over life 24% 11% 5 Output area: NPV 150,000 cost savings $ 100,000 Year Cash flow Year 0 $ (475,000) 0 $ 1 139,680 1 2 139,680 234L 139,680 139,680 5 102,480 Accept/Reject Required pretax cost savings: NPV w/o OCF Required OCF OCF less dep. tax shield Cost savings $ 69 69 69 $ (497,076.39) $ 134,494.11 108,814.11 2345 cost savings Cash flow (475,000) 101,680 101,680 101,680 101,680 64,480
Input area: Installation cost Pretax salvage value Operating cost per year Initial NWC Tax rate Discount rate *Depreciation straight-line over life Output area: Annual depreciation charge Aftertax salvage value OCF NPV $ SA SA SA GA $ 385,000 $ 60,000 $ 135,000 35,000 21% 10% ᏌᏊ Ꮚ Ꮚ $ 77,000 $ 47,400 $ 122,820 5
Heip Save & Exit Submit Homer Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would resuit in an annual increase in net Income after tax of $153,000. The equipment will have an initial cost of $510,000 and have a 5-year life, If the salvage vaiue of the equipment is estimated to be $27,000, what is the annual net cash flow? Multiple Choice 12 $126,000 $56,400 $249.600 $180.000
From the following information calculate the netpresent value of the two projects and suggestwhich of the two projects should be acceptedassuming a discount rate of 10% Project A Project BInitial investment Rs. 20,000 Rs. 30,000Estimated life 5 years 5 yearsScrap value Rs. 1,000 Rs. 2,000 The profit before depreciation and after taxes areas follows:Year Project ARs.Project BRs.1 5,000 20,0002 10,000 10,0003 10,000 5,0004 3,000 3,0005 2,000 3,000
A city is planning to invest in potential projects with the estimated cash flows below. Given that interest rate is 4.880884817% per semiannual, determine which option is preferable if options are mutually exclusive using PW analysis. show the steps: please don't use excel
Explorer Company is considering the following investment proposal: Initial investment: Depreciable assets (straight-line) $28,800 Working capital 3,200 Operations (per year for 4 years): Cash receipts $20,000 Cash expenditures 8,800 Disinvestment: Salvage value of equipment $2,400 Recovery of working capital 3,200 Discount rate: 10 percent Additional information for interest rate of 10 percent and four time periods: Present value of $1 0.68301 Present value of an annuity of $1 3.16987 What is the net present value for the investment? Select one: a. $14,658 b. $35,503 c. $3,825 d. $7,327
Please help me
please answer in text form and in proper format answer with must explanation , calculation for each part and steps clearly
2. Initial Cost, $ Tabulate the incremental cash flow for the alternatives shown below. Machine B -25,000 Machine A -15,000 Annual operating cost, $/year -1,600 -400 Salvage value, $ 3,000 6,000 Life, years 3 6
A certain factory has a first cost of P10,000,000 with a salvage value of P100,000 at the end of its 25-year life. Solve for its book value on the 15th year using a. Straight Line Method b. Sinking Fund Method @ i = 10% c. Declining Balance Method d. Double Declining Balance Method e. Sum of the Years Digit Method

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS