Home Security Systems is analyzing the purchase of manufacturing equipment that will cost $36,000. The annual cash inflows for the next three years will be: Year 1 2 3 Cash Flow $ 18,000 16,000 11,000 Jse Appendix B and Appendix D for an approximate answer but calculate your final answer using the financial calculator method. a. Determine the internal rate of return. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Internal rate of return % b. With a cost of capital of 12 percent, should the equipment be purchased? O Yes O No

Home Security Systems is analyzing the purchase of manufacturing equipment that will cost $36,000. The annual cash inflows for the next three years will be: Year 1 2 3 Cash Flow $ 18,000 16,000 11,000 Jse Appendix B and Appendix D for an approximate answer but calculate your final answer using the financial calculator method. a. Determine the internal rate of return. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Internal rate of return % b. With a cost of capital of 12 percent, should the equipment be purchased? O Yes O No

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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A company is expecting annual cash flows of $10,000 in years 6 to 10; $20,000 annually in years 11 to 20; and $40,000 in years 21 to 30. Given a nominal rate of 4.25% compounded semi-annually, determine the net present value of the cash flows. When entering your answer, round your values to the nearest dollar, and use a $ symbol, as well as the correct comma separator. For example $234,567 Answer: A company is expecting annual cash flows of $10,000 in years 6 to 10; $20,000 annually in years 11 to 20; and $40,000 in years 21 to 30. Given a nominal rate of 4.25% compounded semi-annually, determine the net future value of the cash flows. When entering your answer, round your values to the nearest dollar, and use a $ symbol, as well as the correct comma separator. For example $234,567 Answer:
Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal place.)
You will be receiving the following cashflows: $7,000 today, $4,000 in two years, and $10,000 in five years. If the appropriate discount rate is 5.5%, what is the present value of this cashflow stream? a. $12,623 O b. $18,245 O c. $23,387 O d. $21,052 O e. $15,408 O f. $15,783 g. $9,789 h. $17,739
You plans to withdraw $150,000 at the end of every year from this accout.To prevent overwithdrawal at the end, you put a safety cushion of 3. If balance of the retirement fund at the end of year, before annual withdrawal is less than 3 times the planned annual withdrawal amount, you withdraw one-third of the remaining balance. (Hint: use IF function) How would you set up the CountIF in excel?
What is the excel function and formula for this question? Off-The-Books Investment Firm, LLC, has offered you an investment it says will return to you $20,000 in 2 years. To get in, you'll need to make a $10,000 deposit to their receivables account and promise not to tell anyone about it. What is the annual return on this investment?
Beyer Company is considering the purchase of an asset for $240,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Net cash flows Year 0 1 2 3 4 5 Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal place.) $ Cash Inflow (Outflow) (240,000) Year 1 $60,000 Payback period = Year 2 $36,000 Cumulative Net Cash Inflow (Outflow) Year 3 $60,000
Present value For the case shown in the following table, calculate the present value of the cash flow, discounting at the rate given and assuming that the cash flow is received at the end of the period noted. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) The present value is $. (Round to the nearest cent.) Single cash flow $91,000 Discount rate 15% C End of period (years) 25
Perez Company is considering an investment of $20,957 that provides net cash flows of $6,900 annually for four years. (a) What is the internal rate of return of this investment? (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Round your present value factor to 4 decimals. (b) The hurdle rate is 9%. Should the company invest in this project on the basis of internal rate of return? Complete this question by entering your answers in the tabs below. Required A Required B What is the internal rate of return of this investment? Present value factor Internal rate of return % Required A Required B
PLEASE HELP WITH SHOWING THE COMPLETE CASH FLOW DIAGRAM, FACTOR FORMULA, EQUATION, EXCEL FORMULA, EQUATION AND STEPS. Titan, LLC has a new maintenance cost of $500 at the end of year 1, then $150 at the end of year two that increases by $50 (G) to year 10. How much should Titan, LLC set aside presently to pay for this new expense if interest rates are 8% compounded annually?
Consider two investments: Invest $1,000 and receive $110 at the end of each month for the next 10 months Invest $1,200 and receive $130 at the end of each month for the next 10 months If this were your money, and you want to earn at least 12% interest on your money, which investment would you make, if any? Solve the problem by annual cash flow analysis.
Incognito Company is contemplating the purchase of a machine that provides it with cash savings of $87,000 per year for five years. Interest is 10%. Assume the cash savings occur at the end of each year. Required: Calculate the present value of the cash savings. Note: Use tables, Excel, or a financial calculator. Round your final answer to the nearest whole dollar. (EV of $1. PV of $1. FVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Present value
A civil engineer wants to deposit an amount P now such that she can withdraw an equal annual amount of A1 = P2000 per year for the first 5 years, starting 1 year after the deposit, and a different annual withdrawal of A2 = P3000 per year for the following 3 years. How would the cash flow diagram appear if i = 6.5% per year?

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