P9-12 (similar to)E Question HelpNPV unequal lives. Singing Fish Fine Foods has $1,990,000 for capital investments this year and is considering two potential projects for the funds. Project 1 is updating the store's deli section for additionfood service, The estimated after-tax cash flow of this project is $590,000 per year for the next five years. Project 2 is updating the store's wine section. The estimated annual after-tax cash flow for this projeis $500,000 for the next six years. If the appropriate discount rate for the deli expansion is 9.4% and the appropriate discount rate for the wine section is 9.0%, use the NPV to determine which project SinginFish should choose for the store. Adjust the NPV for unequal lives with the equivalent annual annuity. Does the decision change?If the appropriate discount rate for the deli expansion is 9.4%, what is the NPV of the deli expansion?$ 281272.71 (Round to the nearest cent.)If the appropriate discount rate for the wine section is 9.0%, what is the NPV of the wine section?$ 252,959.30 (Round to the nearest cent.)V project. (Select from the drop-down menu.)Based on the NPV, Singing Fish Fine Foods should pick the

Net present value is the present value of all the future cash flows in todays’s time. It is used in capital budgeting decisions to evaluate a investment’s profitability. Based on the NPV Fish Fine foods should choose “ deli expansion because of higher NPV than wine section. The profitability and worthiness is more of deli expansion.

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Fish should choose for the store. Adjust the NPV for unequal lives with the equivalent annual annuity. Does the decision change? If the appropriate discount rate for the deli expansion is 9.4%, what is the NPV of the deli expansion? $ 281272.71 (Round to the nearest cent.) If the appropriate discount rate for the wine section is 9.0%, what is the NPV of the wine section? $ 252,959.30 (Round to the nearest cent.) V project. (Select from the drop-down menu.) Based on the NPV, Singing Fish Fine Foods should pick the

Fish should choose for the store. Adjust the NPV for unequal lives with the equivalent annual annuity. Does the decision change? If the appropriate discount rate for the deli expansion is 9.4%, what is the NPV of the deli expansion? $ 281272.71 (Round to the nearest cent.) If the appropriate discount rate for the wine section is 9.0%, what is the NPV of the wine section? $ 252,959.30 (Round to the nearest cent.) V project. (Select from the drop-down menu.) Based on the NPV, Singing Fish Fine Foods should pick the

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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You purchased a 270-day $1,000,000 banker's acceptance (BA) six months ago at a discount rate of 6.75%. You sell it today, with 90 days remaining to maturity, at a discount rate of 5.95%. a) What is your rate of return? Use 360-day to annualize. b) What 90-day discount rate when selling the BA today will yield a rate of return of 10% instead of the one obtained in question (a)? c) Explain why a BA is conisdered an off-balance sheet item?
Regis Clothiers can borrow from its bank at 18 percent to take a cash discount. The terms of the cash discount are 3/22, net 40. a. Compute the cost of not taking the cash discount. Note: Use a 360-day year. Do not round intermediate calculations. Input your final answer as a percent rounded to 2 decimal places. Cost of not taking a cash discount
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