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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Concept explainers

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.

Question

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Assume that a company Is consideringa capital Investment project with a four-year time horizon and the following cash flows:
Cost of new equipment
Working 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
Click 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.

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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
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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
Harris Corporation has provided the following data concerning an investment project that it is considering: Initial investment Annual cash flow Salvage value at the end of the project Expected life of the project Discount rate $ 160,000 $ 54,000 $ 11,000 O $67,000 O $160,516 O $516 O $(5,776) 4 15 per year years % Use Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the project is closest to:
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