Need help with this accounting question costs$350,000. YouA factory costsforecast that it will produce cashinflows of $75,000 in year 1, $135,000in year 2, and $210,000 in year 3. Thediscount rate is 11%.a) Calculate the Present Value ofcash inflows.b) Is the factory a good investment?Yes or No?

Step 1: Define Unprofitable ProjectAn unprofitable project does not generate sufficient returns to…

Answered: costs $350,000. You A factory costs…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 1PA: Your company is planning to purchase a new log splitter for is lawn and garden business. The new...

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You work for an outdoor play structure manufacturing company and are trying to decide between the following two projects: Year-End Cash Flows ($ thousanch) 2 21 51 Project 0 Playhouse (minor project) -29 Fort (major poject) -79 1 17 39 You can undertake only one project. If your cost of capital is 6%, which one should you choose? Playhouse because the incremental IRR is 2.52% O Playhouse because the IRR of Fort is lower O Not sure, it depends O Fort because the incremental IRR is 2.52%
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A community project costs GH¢800, 000. You reckon that it will produce an inflow afteroperating costs of GH¢170, 000 a year for 10 years. If the opportunity cost of capital is14 percent, what is the net present value of the factory? What is its profitability index?
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costs $350,000. You A factory costs forecast that it will produce cash inflows of $75,000 in year 1, $135,000 in year 2, and $210,000 in year 3. The discount rate is 11%. a) Calculate the Present Value of cash inflows. b) Is the factory a good investment? Yes or No?