Hello tutor please given correct answer general Accounting Fox, Inc. is considering a six-year project that has an initial after-tax outlay orafter-tax cost of $170,000. The future after-tax cash inflows from its project foryears 1 through 6 are $45,000 for each year. Fox uses the net present value methodand has a discount rate of 11.25%.Calculate the NPV of the project. Will Fox accept the project?

Explanation: Net present value (NPV) is an indicator that helps to identify whether an investment in…

Answered: Fox, Inc. is considering a six-year…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 2PA: Jasmine Manufacturing is considering a project that will require an initial investment of $52,000...

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Markoff Products is considering two competing projects, but only one will be selected. Project A requires an initial investment of $42,000 and is expected to generate future cash flows of $6,000 for each of the next 50 years. Project B requires an initial investment of $210,000 and will generate $30,000 for each of the next 10 years. If Markoff requires a payback of 8 years or less, which project should it select based on payback periods?
Staten Corporation is considering two mutually exclusive projects. Both require an initial outlay of 150,000 and will operate for five years. The cash flows associated with these projects are as follows: Statens required rate of return is 10%. Using the net present value method and the present value table provided in Appendix A, which of the following actions would you recommend to Staten? a. Accept Project X and reject Project Y. b. Accept Project Y and reject Project X. c. Accept Projects X and Y. d. Reject Projects X and Y.
There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows: If the discount rate is 12%, compute the NPV of each project.
The Rodriguez Company is considering an average-risk investment in a mineral water spring project that has an initial after-tax cost of 170,000. The project will produce 1,000 cases of mineral water per year indefinitely, starting at Year 1. The Year-1 sales price will be 138 per case, and the Year-1 cost per case will be 105. The firm is taxed at a rate of 25%. Both prices and costs are expected to rise after Year 1 at a rate of 6% per year due to inflation. The firm uses only equity, and it has a cost of capital of 15%. Assume that cash flows consist only of after-tax profits because the spring has an indefinite life and will not be depreciated. a. What is the present value of future cash flows? (Hint: The project is a growing perpetuity, so you must use the constant growth formula to find its NPV.) What is the NPV? b. Suppose that the company had forgotten to include future inflation. What would they have incorrectly calculated as the projects NPV?
There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment or $28.000 and is expected to generate the following cash flows: If the discount rate is 5% compute the NPV of each project and make a recommendation of the project to be chosen.
Redbird Company is considering a project with an initial investment of $265,000 in new equipment that will yield annual net cash flows of $45,800 each year over its seven-year life. The companys minimum required rate of return is 8%. What is the internal rate of return? Should Redbird accept the project based on IRR?
Noble Inc. is considering a four-year project that has an initial after-tax outlay or after-tax cost of $ 110,000 . The future cash inflows from its project are $30,000, $25,000, $50,000 and $40,000 for years 1, 2, 3 and 4, respectively. Noble uses the net present value method and has a discount rate of 10 %. Will Noble accept the project? Group of answer choices Noble rejects the project because the NPV is -$3,021 Noble accepts the project because the NPV is greater than $3000 Noble accepts the project because the NPV is greater than $2800 Noble rejects the project because the NPV is less than -$4,000
Julie Miller is evaluating a new project for her firm, Basket Wonders (BW). She has determined that the after-tax cash flows for the project will be $15,000; $18,000; $20,000; $15,000; and $8,000, respectively, for each of the Years 1 through 5. The initial cash outlay will be $40,000. Basket Wonders has determined that the appropriate discount rate (k) for this project is 12%.The NPV of project is;
?? Financial accounting question
ogue River, Inc. is considering a project that has an initial after-tax outlay or after-tax cost of $220,000. The respective future cash inflows from its four-year project for years 1 through 4 are $80,000, $60,000, $70,000, and $50,000. Rogue River has a discount rate of 8.5%. Appraise the project by using the following methods: a) Payback period model b) Discounted Payback Period c) Net Present Value (NPV) d) Profitability Index (PI) e) Explain the two significant weaknesses of payback period model f) Advise Rogue River what to do based on your findings
You are evaluating purchasing the rights to a project that will generate after tax expected operating cash flows of $91k at the end of each of the next five years, plus an additional $1,000k non-operating terminal period cash flow at the end of the fifth year. You can purchase this project for $531k. If your firm's cost of capital (aka required rate of return) is 14.3%, what is the NPV of this project? Note: All dollar values are given in units of $1k = $1000. Provide your answer in units of $1000, thus, $15000 = 15k and thus you should enter 15 for your answer.
Garry Manufacturing Company is considering a three-year project that has a cost of $75,000. The project will generate after-tax cash flows of $33,100 in Year 1, $31,500 in Year 2, and $31,200 in Year 3. Assume that the firm's proper rate of discount is 10% and that the firm's tax rate is 40%. What is the project's payback and outline any limitations in using the payback period method in selecting acceptable projects?

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