LENLEN Company is considering on investing in new automated machinery. The machinery will be used for five years in the project. (Prevailing cost of capital at 10% per annum) The new investment needs a P1,700,000 cash outflow. The estimated cash inflow of income from the investment of machinery for the next five (5) years would be: YEAR CASH INFLOWS 1 P 950,000 750,000 2 650,000 350,000 3 4 5 150,000 REQUIRED: By applying the following evaluation techniques if the investment economically acceptable. Show your complete solution and Answer it if acceptable or not acceptable from 1 to 4 below: 1. Payback period 2. Discounted payback period

LENLEN Company is considering on investing in new automated machinery. The machinery will be used for five years in the project. (Prevailing cost of capital at 10% per annum) The new investment needs a P1,700,000 cash outflow. The estimated cash inflow of income from the investment of machinery for the next five (5) years would be: YEAR CASH INFLOWS 1 P 950,000 750,000 2 650,000 350,000 3 4 5 150,000 REQUIRED: By applying the following evaluation techniques if the investment economically acceptable. Show your complete solution and Answer it if acceptable or not acceptable from 1 to 4 below: 1. Payback period 2. Discounted payback period

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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mantel is installing new equipment at a cost of 250000 OMR. Expected cash flows from this project over the next three years will be 145000 OMR , 190000 OMR and 185000 OMR. The company's discount rate for such projects is 14 percent. What is the project's discounted payback period? a. 1.53 years b. 1.84 years c. None of these d. 2.82 years e. 1.54 years
Sons Inc. management is considering purchasing a new machine at a cost of $4,390,000. They expect this equipment to produce cash flows of $845,890, $819,250, $917,830, $1,103,400, $1,093,260, and $1,306,800 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this investment? (Enter negative amounts using negative sign e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to 0 decimal places, e.g. 1,525.) The NPV is $
Johnson Chemicals is considering an investment project. The project requires an initial P3 million outlay for equipment and machinery. Sales are projected to be P1.5 million per year for the next four years. The equipment will be fully depreciated straight- line by the end of year 4. Cost of goods sold and operating expense (not including depreciation) are predicted to be 30% of sales. The equipment can be sold for P400,000 at the end of year 4. Johnson Chemicals also needs to add net working capital of P100,000 immediately. The net working capital will be recovered in full at the end of the fourth year. Assume the tax rate is 40% and the cost of capital is 10%. What is the NPV of this investment?
ABC Company Limited looking to invest in one of the proposed projects. The cost of that project is $50,000 and cash inflows and outflows are projected for 5 years, as shown in the below table. Calculate the Profitability Index of the Project using the given interest rate and 8%. The interest rate is 5%. Years Cash Inflows Cash Outflows 0 (50,000.00) 1 20,000.00 5,000.00 2 14,000.00 2,000.00 3 12,000.00 2,000.00 4 12,000.00 2,000.00 5 15,000.00 1,000.00 Net Present Value
A construction management company is examining its cash flow requirements for the next few years. The company expects to replace software and in-field computing equipment at various times. Specifically, the company expects to spend $5,000 1 year from now, $11,000 3 years from now, and $17,000 each year in years 6 through 10. What is the future worth in year 10 of the planned expenditures, at an interest rate of 13.00% per year? (Round the final answer to three decimal places.) The future worth is determined to be $
Emerald Enterprises is developing a new product at the cost of $ 50,000. The new product is expected to increase the cash flow for the next five years as follows: $ 10000, $ 15000, $ 15000, $ 20000 and $ 20000. Find the payback period. (Note: Roundup the fractional values; that is if the payback period is 6.23 years, enter 7 years as payback period) 4 years 5 years 3 years 2 years
Emerald Enterprises is developing a new product at the cost of $ 50,000. The new product is expected to increase the cash flow for the next five years as follows: $ 10000, $ 15000, $ 15000, $ 20000 and $ 20000. If the discounting rate is 12%, what is the Net Present Value of the investment? $ 5622.08 $ 30000.00 $ 17022.81 $ - 560.90
Bluefield Inc. is considering a project that will require an initial investment of $20,000 and is expected to generate future cash flows of $5,000 for years 1 through 3 and $2,500 for years 4 through 6. The project’s payback period is: A. 6 years B. 5 years C. 4 years D. 67 years
Big Steve's, a maker of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $130,000 and will generate cash inflows of $37,000 per year for 7 years. If the discount rate is 17%, what is the project's IRR? (Round to two decimal places.) O A.17.00% OB. 20.94% O C. 32.52% OD. 37.33% MacBook Air
company investment on a machine costing of P40,000 and has a life of 5 years. Yearly cash inflows are as follows: Year 1-P18,000; Year 2-P12,000; Year 3-P10,000; Year 4-P9,000; and Year 5-P6,000. Calculate Net present value at 10% and PI. Will the company accept or reject the project? Complete the table below. 2. A Year Cash flows PV Factor @10% PV 2. 4 Total PV Less-investment Net Present Value PI=
HSJ Foods is getting ready to produce a new line of products by investing 185000 OMR. The investment will result in additional cash flows of 52500 OMR , 81250, and 120000 over the next three years. What is the payback period for this project? Select one: a. 1.53 years b. 1.84 years c. 2.62 years d. None of these e. 2.42 years
A company is considering a 5-year project. The company plans to invest $85,000 now and it forecasts cash flows for each year of $21,855. The company requires a hurdle rate of 7%. Calculate the internal rate of return to determine whether it should accept this project.

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