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

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Cash PaybackAnderson Company must evaluate two capital expenditure proposals. Anderson's hurdle rate is 12%. Data for the two proposals follow. Proposal X Proposal Y Required investment $360,000 $360,000 Annual after-tax cash inflows 80,400 After-tax cash inflows at the end of years 3, 6, 9, and 12 188,000 Life of project 12 years 12 years What is the cash payback period for Proposal X? For Proposal Y? Hint: For Proposal Y, in what year (3, 6, 9 or 12) will the full original investment be recovered? Round Proposal X answer to one decimal place, if applicable. Proposal X Answer years Proposal Y Answer years
The following data relates to an investment proposal: Investment in equipment Net annual cash inflow $32,000 5,000 expected Working capital required Salvage value of equipment Life of the project 8,000 2,000 10 years Working capital will be recovered at the end of the project's life. Using an 6% discount rate, the net present value of the project is closest to: $10,380 ($2,084) None of the other answers are correct $5,916 $2,380
Continental Railroad Company is evaluating three capital investment proposals by using the net present value method. Relevant data related to the proposals are summarized as follows: Line Item Description Maintenance Equipment Ramp Facilities Computer Network Amount to be invested $551,372 $327,621 $172,660 Annual net cash flows: Year 1 277,000 186,000 125,000 Year 2 258,000 167,000 86,000 Year 3 235,000 149,000 63,000 Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: 1. Assuming that the desired rate of return is 20%, prepare a net present value analysis for each proposal. Use the present value of $1 table above. If required,…
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
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please answer in text form and in proper format answer with must explanation , calculation for each part and steps clearly
Alpha Bridge Project SUMMARY OF BRIDGE REPAIR COSTS Year Activity Cost GH¢ 2005 Inspection and top chord repairs 44,800 2007 Inspection and erosion protection 19,800 2009 Inspection 1,800 2011 Inspection and misc. steel repairs 31,800 2013 Inspection 1,800 2015 Inspection 1,800 2017 Inspection and repair abutments 65,000 2019 Inspection 1,800 Calculate the present value of the costs for the above project cash flow with a discounting rate of 5%
Solve 1-3
ic Yo NS io cer ist bun ngs nnée Current Attempt in Progress Blossom Manufacturing Co. is evaluating two projects. The company uses payback criteria of three years or less. Project A has a cost of $905,000, and project B's cost is $1,247,300. Cash flows from both projects are given in the following table. Year 1 2 3 4 Project A $86,212 313,562 427,594 285,552 Project B $586,212 413,277 231,199 What are their discounted payback periods? (Round answers to 2 decimal places, e.g. 15.25. If discounted payback period exceeds life of the project, enter 0.00 for the answer.) Discounted payback period of project A Discounted payback period of project B will he accepted with a discount rate of 8 percent? átv zoom
Cash PaybackAnderson Company must evaluate two capital expenditure proposals. Anderson's hurdle rate is 12%. Data for the two proposals follow. Proposal X Proposal Y Required investment $540,000 $540,000 Annual after-tax cash inflows 54,000 After-tax cash inflows at the end of years 3, 6, 9, and 12 136,000 Life of project 12 years 12 years What is the cash payback period for Proposal X? For Proposal Y? Hint: For Proposal Y, in what year (3, 6, 9 or 12) will the full original investment be recovered? Round Proposal X answer to one decimal place, if applicable. Proposal X Answer years Proposal Y Answer years
How do you calculate net investment in working capital, net cash flows, present value of net cash flows, and NPV? WACC is 10.10%

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