Generro Company Is considering the purchase of equipment that would cost $36,000 and offer annual cash Inflows of $10,500 over Its useful life of 5 years. Assuming a desired rate of return of 12%, Is the project acceptable? (PV of $1 and PVA of $1) (Use appropriatefactor(s) from the tables provlded.)Multiple ChoiceNo, since the negative net present value indicates the investment will yield a rate of return below the desired rate of return.Yes, since the investment will generate $52,500 in future cash flows, which is greater than the purchase cost of $36,000.Yes, since the positive net present value indicates the investment will eam a rate of return greater than 12%.The answer cannot be determined.1214 AM

Given that, Present value of cash outflows = $36000 Cash inflows = $10500 for 5 years Required…

Answered: Generro Company is considering the…

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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Yokam Company is considering two alternative projects. Project 1 requires an initial investment of $400,000 and has a present value of cash flows of $1,100,000. Project 2 requires an initial investment of $4,000,000 and has a present value of cash flows of $6,000,000. 1. Compute the profitability index for each project. 2. Based on the profitability index, which project should the company prefer? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the profitability index for each project. Project 1 Project 2 Choose Numerator: Profitability Index T 7 Choose Denominator: 4 of 5 180 # Next > G O
An investment that costs $25,000 will produce annual cash flows of $5,000 for a period of 6 years. Further, the investment has an expected salvage value of $3,000. Given a desired rate of return of 12%, the investment will generate a (Do not round your PV factors and intermediate calculations. Round your answer to the nearest whole dollar): Multiple Choice negative net present value of $2,923. negative net present value of $1,520. negative net present value of $25,000. positive net present value of $20,557
An investment that costs $22,500 will produce annual cash flows of $4,500 for a period of 6 years. Further, the investment has an expected salvage value of $2,750. Given a desired rate of return of 9%, what will the investment generate? (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Do not round your intermediate calculations. Round your answer to the nearest whole dollar.
The Sunshine Corporation has to make a choice between two different solutions to its current production bottleneck. It can purchase the Superduper Model XT, which is more expensive but will have a useful life of 6 years, or it can purchase the Mediocre Model UX, which is less expensive but will only have a useful life of 3 years. The company requires a 10 percent rate of return on its investments. The Superduper’s cash flows are: Yr0 = -75, Yr1 = 10, Yr2 = 15, Yr3 = 25, Yr4 = 30, Yr5 = 25, Yr6 = 20. The Mediocre’s cash flows are: Yr0 = -50, Yr1 = 25, Yr2 = 30, Yr3 = 13. Using the replacement chain method, which of these two alternatives is better?
Use PRESENT WORTH. Show complete solution and cash flow diagram.
Please see attached:
Wavy Inc is examining a project that requires an initial investment of -10 million today. This will be followed by several years of positive incremental after-tax cash flows. However, during the last year of the project's life Wavy expects that the incremental cash flow will again be negative. By which method should Wavy determine whether or not to invest? A) Both NPV or IRR are fine, as they must arrive at same investment decision B) IRR, because there will be no NPV solution in this case C) Neither NPV or IRR are useful in this situation D) NPV, since this project will have two IRRs
Calculate the accounting rate of return for project A and B.
Please answer fast without plagiarism and introduction please
ThreeRivers Corp. is considering the purchase of a new piece of equipment with a life of 12 years. The internal rate of return of the project is 20%. ThreeRivers has a required rate of return (hurdle rate) of 17%. The project would have: Multiple Choice a net present value greater than zero. a payback period more than 12 years. a net present value of zero. an accounting rate of return greater than 17%.
Novak Company is contemplating an investment costing $168,810. The investment will have a life of 8 years with no salvage value and will produce annual cash flows of $30,500. Click here to view PV tables. What is the approximate internal rate of return associated with this investment? (Use the above table.) (Round answer to O decimal places, e.g. 15%) Internal rate of return. %6
Assume that a company is considering purchasing a machine for $50,500 that will have a five-year useful life and no salvage value. The machine will lower operating costs by $17,000 per year. The company's required rate of return is 18%. The profitability index for this investment is closest to: Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. Multiple Choice O 0.95. 1.01. 1.05. 1.11.

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