Following is information on two alternative investments. Beachside Resort is considering building a new pool or spa. The companyrequires a 12% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tablesprovided.)Initial investmentPool$ (174,325)Spa$ (155,960)Net cash flows in:Year 154,00028,000Year 243,00051,000Year 376,29558,000Year 488,40080,000Year 565,00019,000a. For each investment project compute the net present value.b. For each investment project compute the profitability index.c. If the company can only select one project, which should it choose on the basis of profitability index?Complete this question by entering your answers in the tabs below.Req AReq B and CFor each investment project compute the net present value.PoolNet Cash Flows x Present ValueYear 1Year 2Year 3Year 4Year 5TotalsSpaNet Cash FlowsXPresent ValueYear 1Year 2Year 3Year 4Year 5Totals=======Present Value ofNet Cash FlowsPresent Value ofNet Cash Flows

Req A:Pool:Year 1 cash flow: $54,000Year 2 cash flow: $43,000Year 3 cash flow: $76,295Year 4 cash…

Answered: Following is information on 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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The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year Investment Cash Inflow 5 123456 $ 60,000 $ 4,000 $ 3,000 $ 8,000 3 $ 16,000 $ 17,000 $ 20,000 $ 18,000 7 $ 16,000 68 8 $ 14,000 9 $ 13,000 10 $ 13,000 Required: 1. Determine the payback period of the investment. 2. Would the payback period be affected if the cash inflow in the last year were several times as large? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the payback period of the investment. (Round your answer to 1 decimal place.) Payback period years
ABC Company Limited looking to invest in one of the proposed projects. The cost of that project is $50,000 and cash inflows and outflows are projected for 5 years, as shown in the below table. Calculate the Profitability Index of the Project using the given interest rate and 8%. The interest rate is 5%. Years Cash Inflows Cash Outflows 0 (50,000.00) 1 20,000.00 5,000.00 2 14,000.00 2,000.00 3 12,000.00 2,000.00 4 12,000.00 2,000.00 5 15,000.00 1,000.00 Net Present Value
Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 4% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Initial investment Project X1 $ (80,000) Project X2 $ (120,000) Net cash flows in: Year 1 25,000 60,000 Year 2 Year 3 35,500 50,000 60,500 40,000 a. Compute each project's net present value. b. Compute each project's profitability index. c. If the company can choose only one project, which should it choose on the basis of profitability index? Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute each project's net present value. Net Cash Flows Present Value of Present Value of Net 1 at 4% Cash Flows Project X1 Year 1 $ 25,000 Year 2 35,500 Year 3 60,500 0.8890 Totals $ 121,000 $ 0 Initial investment (80,000) Net present value $ (80,000) Project X2 Year 1 Year 2 Year 3 Totals…
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The following are the net cash flow estimates (in thousands of dollars) of the two (2) proposed projects, you are planning to invest in. Expected Net Cash Flow Year Restaurant & Bar Hardware $M $M 0 (200) (200) 1 10 70 2 60 50 3 100 40…
A company is evaluating three possible investments. The following information is provided by the company: Project A Project B Project C Investment $238,000 $54,000 $238,000 Residual value 0 30,000 40,000 Net cash inflows: Year 1 70,000 30,000 100,000 Year 2 70,000 21,000 70,000 Year 3 70,000 17,000 80,000 Year 4 70,000 14,000 40,000 Year 5 70,000 0 0 What is the payback period for Project A? (Assume that the company uses the straight−line depreciation method.) (Round your answer to two decimal places.) A. 1.8 years B. 2.4 years C. 5.00 years D. 3.4 years
Following is information on two alternative investments being considered by Jolee Company. The company requires a 8% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project A $(171,325) Project B $(159,960) Initial investment Expected net cash flows in: 35,000 59,000 55,000 Year 1 54,000 45,000 87,295 81,400 65,000 Year 2 Year 3 73,000 20,000 Year 4 Year 5 a. For each alternative project compute the net present value. b. For each alternative project compute the profitability index. If the company can only select one project, which should it choose? Complete this question by entering your answers in the tabs below. Required A Required B For each alternative project compute the net present value.
First United Bank Inc. is evaluating three capital investment projects using the net present value method. Relevant data related to the projects are summarized as follows: BranchOfficeExpansion ComputerSystemUpgrade ATMKioskExpansion Amount to be invested $686,053 $516,654 $295,458 Annual net cash flows: Year 1 411,000 288,000 177,000 Year 2 382,000 259,000 122,000 Year 3 349,000 230,000 89,000 Present Value of $1 at Compound Interest 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 project. Use the…
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c. A company is planning to invest in a project over a 5-year period, but wants to know its financial implications. It expects the cash in-flow return on the investment to steadily increase over the 5 years. Using the information below, help determine the Total Net Cash Flows, the Net Present Value and the estimated Payback Period. Note: Estimate the payback period to the nearest year. Discount Rate 12% Investment Project Cash Flow Total Net Cash Flow Initial Investment $ (5,000) ? Year 1 $ 800 ? Year 2 $ 900 ? Year 3 $ 1,500 ? Year 4 $ 1,800 ? Year 5 $ 3,200 ? NPV of investment ? Estimated Payback Period

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