(i) Calculate the payback period. Year Cash Flow Cumulative Cash Flow $ Note: Copy the above table and complete the calculations in the answer booklet. (ii) Calculate the net present value. Year Cash Flow Discount Factor at Present Value (to fill the discount factor) $ $ Note: Copy the above table and complete the calculations in the answer booklet. (iii) Advise the management as to whether they should proceed to procure the new equipment. (iv) La Vie Limited is presented with Project Sunny and Project Cloudy. Project Sunny has a payback period of 4.4 years, while Project Cloudy has a payback period of 3.7 years. The company policy is to accept only projects with a payback period of 4 years and below. [Note that part c is independent of part a and b] Required: Advise La Vie Limited, which project should be undertaken and why.

(i) Calculate the payback period. Year Cash Flow Cumulative Cash Flow $ Note: Copy the above table and complete the calculations in the answer booklet. (ii) Calculate the net present value. Year Cash Flow Discount Factor at Present Value (to fill the discount factor) $ $ Note: Copy the above table and complete the calculations in the answer booklet. (iii) Advise the management as to whether they should proceed to procure the new equipment. (iv) La Vie Limited is presented with Project Sunny and Project Cloudy. Project Sunny has a payback period of 4.4 years, while Project Cloudy has a payback period of 3.7 years. The company policy is to accept only projects with a payback period of 4 years and below. [Note that part c is independent of part a and b] Required: Advise La Vie Limited, which project should be undertaken and why.

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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The basis for classifying assets as current or noncurrent is conversion to cash within Select one: a. the operating cycle or one year, whichever is longer. b. the accounting cycle or one year, whichever is shorter. c. the accounting cycle or one year, whichever is longer. d. the operating cycle or one year, whichever is shorter.
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 $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: 1. Assuming that the desired rate of return is 20%, prepare a net present value analysis for each project. Use the…
The following proforma shows unleveraged cash flows for a property if an investor were to purchase it today and resell it at the end of the third year: (Show answer in Excel) What is the present value of the each of the discounted cash flows from Year 1, Year 2, and Year 3, using a discount rate of 8.75% (hint: calculate each on separately)? What is the Net Present Value of this investment?
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Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow -$ 29,800 012345 12,000 14,700 16,600 13,700 -10,200 The company uses a discount rate of 13 percent and a reinvestment rate of 6 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR b. Reinvestment approach MIRR c. Combination approach MIRR % % %
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M Corp. recorded a finance lease in February of Year 1 using an annuity due present value table. The company's statement of cash flows for the year ending December 31, Year 1 using the direct method will report_____? A. a cash inflow from investing activities. B. a cash outflow from financing activities. C. a cash outflow from investing activities. D. a cash inflow from operating ...
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Requirement 1. Prepare the statement of cash flows of Morston Educational Supply for the year ended Dec 31,2024. Use the indirect method to report cash flows from operating. Requirement 2. If morston plans similar activity for 2025 what is it’s expected free cash flow? Select the labels and enter the amounts to calculate morstons expected free cash flow for 2025
The management of Peridot Inc. is submitting a proposal to the Board of Directors for a new facility with the following cash flows. Year Cash flow 0 -214 1 52 2 61 3 74 4 82 The company's hurdle rate is 9%. internal rate of return for the proposed project is closest to: A. 10.15%. B. 9.06%. C. 9.00%.

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