Findell Corporation Is considering two projects, A and B, and It has gathered the following estimates for the projects:Project AProject BUseful life5 Years5 YearsPresent value of cash inflowsPresent value of cash outflows$84,360$55,100$77,000$49,000What Is the net present value of cash flows for project B?Multiple Choice$7.360$6,100$1,260None of these answerS are correct

Net present value means the difference between the present value of cash inflow and present value of…

Answered: Findell Corporation Is considering two…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Carol, Inc. is considering three different independent investment opportunities. The present value of future cash flows, initial investment, and net present value for each of the projects are as follows: Project A Project B Project C Present value of future cash flows $ 651,200 $ 476,700 $ 585,200 Initial investment 280,000 235,000 270,000 Net present value $ 371,200 $ 241,700 $ 315,200 In what order should Carol prioritize investment in the projects? Multiple Choice A, B, C C, A, B C, B, A A, C, B
RiverRocks, Inc., is considering a project with the following projected free cash flows: Year 1 3 4 Cash Flow -$50.3 $10.3 $19.3 $19.5 $14.1 (in millions) The firm believes that, given the risk of this project, the WACC method is the appropriate approach to valuing the project. RiverRocks' WACC is 11.8%. Should it take on this project? Why or why not? The timeline for the project's cash flows is: (Select the best choice below.) O A. Cash Flows (millions) - $50.3 $10.3 $19.3 $19.5 $14.1 Year 1 2 3 4 O B. Cash Flows (millions) -$50.3 $10.3 - $19.3 - $19.5 - $14.1 Year 1 3 4 O C. Cash Flows (millions) $50.3 $10.3 $19.3 - $19.5 - $14.1 Year 1 O D. Cash Flows (millions) $50.3 $10.3 $19.3 $19.5 $14. Year 1 2 3 4 The net present value of the project is S million. (Round to three decimal places.) RiverRocks take on this project because the NPV is (Select from the drop-down menus.)
Braun Industries is considering an investment project that has the following cash flows: Year 0 1 2 3 Project Cash Flows -$634 $374 $309 $327 The company's WACC is 13.3 percent. What is the project's payback, internal rate of return (IRR), and net present value (NPV)? Should this project be accepted? O 1.54 years; 31.31% ; $191.64; No O 1.84 years; 28.31% ; $161.64; Yes O 1.64 years; 30.31% ; $181.64; Yes O 1.74 years; 29.31% ; $171.64; Yes O 1.54 years; 31.31% ; $191.64; Yes
RiverRocks, Inc., is considering a project with the following projected free cash flows: Year 0 Cash Flow - $50.8 (in millions) O A. Cash Flows (millions) - $50.8 The timeline for the project's cash flows is: (Select the best choice below.) Year B. Cash Flows (millions) The firm believes that, given the risk of this project, the WACC method is the appropriate approach to valuing the project. RiverRocks' WACC is 12.8%. Should it take on this project? Why or why not? Year O C. Cash Flows (millions) Year D. Cash Flows (millions) Year 0 - $50.8 0 $50.8 0 $50.8 0 - $10.8 + 1 $10.8 1 - $10.8 1 1 $10.8 $10.8 1 - $20.7 2 $20.7 2 - $20.7 2 2 $20.7 $20.7 2 - $19.5 3 $19.5 + 3 - $19.5 3 $19.5 3 $19.5 3 - $15.4 4 $15.4 4 - $15.4 4 $15.4 4 $15.4 4
We are analyzing a project and have gathered the following data. Based on this data, what is the average accounting rate of return? The project's assets will be depreciated using straight-line depreciation to a zero book value over the life of the project. Year Cash Flow Net Income 0 $285,000 n/a 1 $83,650 $12,400 2 $92,850 $21,600 3 $94,350 $23,100 4 $93,250 $22,000
Simms Corp. is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC or negative, in both cases it will be rejected. Year 0 1 2 3 Cash flows -$1,025 $425 $425 $425
All information is provided
Time, Co. has a project available with the following cash flows: Cash Flow -$ 31,190 13,170 14,740 Year 0 1 2 3 4 21,060 12,200 If the required return for the project is 9.9 percent, what is the project's NPV? Multiple Choice $19,687.63 $15,791.12 $8,863.54 $17,226.67
Findell Corporation is considering two projects, A and B, and it has gathered the following estimates for the projects Project A 5 years $84,480 $64,000 Project B 5 years $57,300 $50,000 Useful life Present value of cash inflows Present value of cash outflows What is the present value index for Project A?
UF Company is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and are not repeatable. WACC: 7.75% Year 0 1 2 3 4 CFS ($1,050) $700 $625 CFL ($1,050) $370 $370 $360 $360 If the decision is made by choosing the project with the higher IRR, how much value will be forgone?
RiverRocks, Inc., is considering a project with the following projected free cash flows: Year 1 2 3 Cash Flow - $49.7 $10.2 $19.6 $19.6 $15.1 (in millions) The firm believes that, given the risk of this project, the WACC method is the appropriate approach to valuing the project. RiverRocks' WACC is 12.4%. Should it take on this project? Why or why not? The timeline for the project's cash flows is: (Select the best choice below.) O A. Cash Flows (millions) - $49.7 - $10.2 - $19.6 - $19.6 - $15.1 Year 1 2 3 4 O B. Cash Flows (millions) $49.7 $10.2 $19.6 $19.6 $15.1 Year 1 4 O C. Cash Flows (millions) - $49.7 $10.2 $19.6 $19.6 $15.1 Year 1 2 3 4 O D. Cash Flows (millions) $49.7 - $10.2 - $19.6 $19.6 - $15.1 Year 1 2 4 The net present value of the project is S million. (Round to three decimal places.) RiverRocks V take on this project because the NPV is (Select from the drop-down menus.)
4. A company is considering investing in a project that requires a capital investment of $40,726 and is expected to generate cash inflows of $11,072 for each year for 6 years. The company has a minimum required rate of return 8%. State the net present value of the project rounded to the nearest one dollar. If the NPV is negative, put a "-" before your number.

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