>\Gem Robotics is evaluating an investment in automated production lines for its factory. The project requires an initial investment of $800,000. The company expects cashinflows of $225,000 per year for 5 years. The company's target is a 18% ROI and a maximum payback period of 6 years. For each answer, provide your answer to twodecimal places. Enter % as whole numbers (i.e. 48.68% would be entered 48.68)What is the return on investment? 40.63What is the payback period? 3.56What is your recommendation? Invest

Recommendation: According to the financial indicators estimated, it is advisable for Gem Robotics to…

Answered: >\ Gem Robotics is evaluating an…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 15E: Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided...

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Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return In Excel, see Appendix C.
Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.
Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 8%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?
Can you show me how this is done? Emily Company has a minimum required rate of return of 9%. It is considering investing in a project that costs $90,671 and is expected to generate cash inflows of $23,576 at the end of each year for three years. The profitability index for this project is Round your answer to 2 decimal places. Selected Answer: 65 Correct Answer: 0.66 ± 0.05
A company that manufactures magnetic flow meters expects to undertake a project that will have the cash flows below. At an interest rate of 10% per year, what is the equivalent annual cost of the project? Find the AW value using (a) tabulated factors, (b) calculator functions, and (c) a spreadsheet. Which method did you find the easiest to use?
Use Excel’s NPV function for this problem. Riverside Inc. has an 8% cost of capital. The firm has an investment opportunity that costs $1,000. Riverside expects the investment to generate annual cash inflows $360 for each of the next three years. The net present value of the project (rounded to the nearest dollar) is Select one: a. $80. b. $72. c. ($72). d. ($80). Use Excel’s IRR function for this problem. Rancho Cucamonga has a 6% cost of capital. The firm has an investment opportunity that costs $2,000. Riverside expects the investment to generate annual cash inflows $600 for each of the next four years. The internal rate of return and Rancho’s decision are Select one: a. 7.7% and don’t invest in the project. b. 1.7% and don’t invest in the project. c. 1.7% and invest in the project. d. 7.7% and invest in the project. Whitelands Inc. bought equipment for $150. Whitelands estimated that the equipment would last ten years and used the double-declining balance method to depreciate it.…
Sentinel Company is considering an investment in technology to improve its operations. The investment will require an initial outlay of $250,000 and will yield the following expected cash flows. Management requires a 10% return on investments. Period 1 Period 2 Period 3 Period 4 Period 5 Cash flow . $47,000 $52,000 $75,000 $94,000 $125,000 Required 1. Determine the payback period for this investment. (Round the answer to one decimal.) 2. Determine the break-even time for this investment. (Round the answer to one decimal.) 3. Determine the net present value for this investment. Analysis Component 4. Should management invest in this project?
← FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $214,500 per year. Once in production, the bike is expected to make $296,481 per year for 10 years. The cash inflows begin at the end of year 7. For parts a-c, assume the cost of capital is 9.5%. a. Calculate the NPV of this investment opportunity. Should the company make the investment? b. Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. c. How long must development last to change the decision? For parts d-f, assume the cost of capital is 14.2%. d. Calculate the NPV of this investment opportunity. Should the company make the investment? e. How much must this cost of capital estimate deviate to change the decision? f. How long must development last to change the decision? a. Calculate the NPV of this investment opportunity. If the cost of capital is 9.5%, the NPV is $.…
Innovation Company is thinking about marketing a new software product. Upfront costs to market and develop the product are $4.97 million. The product is expected to generate profits of $1.08 million per year for ten years. The company will have to provide product support expected to cost $99,000 per year in perpetuity. Assume all profits and expenses occur at the end of the year. a. What is the NPV of this investment if the cost of capital is 6.2%? Should the firm undertake the project? Repeat the analysis for discount rates of 1.6% and 14.2%, respectively. b. What is the IRR of this investment opportunity? c. What does the IRR rule indicate about this investment?
Consider a project with an initial investment (today, t = 0) of $200,975. This project will generate cash flows of $49,500 per year for the next 8 years, at which time (end of Year 8) the company will pay $50,000 to another for clean-up and disposal. What is the Profitability Index (PI) of the project if shareholders demand a 16.295% return? Answer with a number rounded to three decimal places, e.g., 4.0877% should be entered as 4.088.
Consider a project with an initial investment (today, t = 0) of $225,000. This project will generate cash flows of $68,750 per year for the next 6 years. The company will pay $50,000 to another for clean-up and disposal in Year 6. What is the Profitability Index (PI) of the project if shareholders demand 8.25% return? Answer in whole numbers, rounded to three decimal places.
Help NPV Calculate the net present value (NPV) for a 10-year project with an initial investment of $20,000 and a cash inflow of $6,000 per year. Assume that the firm has an opportunity cost of 18%. Comment on the acceptability of the project. The project's net present value is $ (Round to the nearest cent.) Тext ia Librai Calculat Resource Enter your answer in the answer box and then click Check Answer. Check Answer c Study 1 part remaining Clear All 10:27 PM unication Tools > 4/19/202 Type here to search insert fo 144

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