. What is the internal rate of return for this investment?
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- Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated revenue producing lite of 4 years. Mason has a required rate of return that is 12% and a cost of capital of 11%. 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?XYZ Company is looking to invest in some new machinery to replace its current malfunctioning one. The new machine, which costs P420,000, would increase annual revenue by P200,000 and annual cash expenses by P50,000. The machine is estimated to have a useful life of 12 years and P30,000 salvage value. Solve for the: A. Payback period in years B. Payback period reciprocal C. Accounting rate of return on initial investment D. Accounting rate of return on average investment.An equipment which can be purchase for P700,000 is expected to generate a net cash flow of P200,000 annually for five years which is the estimated service life of the equipment. Its salvage value at the end of the service life is estimated to be 5% of its purchased cost. a. What is the rate of return of the initial investment? b. What is the simple pay-back period? c. If the company's minimum attractive rate of return(MARR) is set at 15%, using NPW is this investment acceptable? d. What is the internal rate of return(IRR) of this machine? e. What is the external rate of return(ERR) at the 15% MARR?
- Salt Lake Potash is considering a project with the following cash flows. An initial investment of $1.025bn is required for the project. The discount rate is 9%. The company wants to calculate how long it would take investors to recover their initial investment. The company does not want to ignore the effects of time value of money and the discount rate. Year O CF ($mn) -$1,025 1.83 years 2.26 years What is your best estimate of the time to recovery? $159.79mn 1 2 $650 $450 19.9% 3 $250 4 $50The firm’s is considering an investment in some additional equipment. The equipment has a net cost of investment amounting to ₱600,000 and has an estimated useful life of 5 years with no salvage value. The firm expects an annual cash inflow of ₱128,000 from this equipment. The firm’s internal rate of return is 14%. What is the payback period on this equipment? a. 2.70 years b. 3.70 years c. 4.69 years d. 4.92 years e. 5.00 yearsThe firm’s is considering an investment in some additional equipment. The equipment has a net cost of investment amounting to ₱800,000 and has an estimated useful life of 5 years with no salvage value. The firm expects an annual cash inflow of ₱228,000 from this equipment. The firm’s internal rate of return is 14%. What is the payback period on this equipment? 3.51 years 3.70 years 4.69 years 4.92 years 4.98 years 5 years
- XYZ Company is looking to invest in some new machinery to replace its current malfunctioning one. The new machine, which costs P420,000, would increase annual revenue by P200,000 and annual cash expenses by P50,000. The machine is estimated to have a useful life of 12 years and P30,000 salvage value. A. Payback period in years B. Payback period reciprocal C. Accounting rate of return on average investment.30. Capital outlay. Chrome Solutions determines that the rate of revenue coming in from a new machine is R1(t) = 8000 – 100t, in dollars per year, for 8 yr, after which the machine will be replaced. The company learns that an alternative ma- chine will yield revenue at a rate of R2(t) = 7600 – 85t. a) Find the accumulated present value of the income stream from each machine at an interest rate of 5.8%, compounded continuously. b) Find the difference in the accumulated present values.g 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 $37,0C r 7 years. If the discount rate is 17%, what is the project's IRR? (Round to two decimal places.) OA.17.00% B. 20.94% OC. 32.52% OD. 37.33% Questio
- Giant Machinery Ltd is considering to invest in one of the two following Projects to buy a newequipment. Each project will last 5 years and have no salvage value at the end. The company’s requiredrate of return for all investment projects is 9%. The cash flows of the projects are provided below. project 1 project 2 cost 175000 185000 future cash flows year 1 76000 87000 year 2 83000 78000 year 3 67000 69000 year 4 65000 65000 year 5 55000 57000 Required:a) Identify which project should the company accept based on NPV method. (Note: Pleaseround up the result of each calculation of PV to 2 decimal places only for simplification)b) Identify which project should the company accept based on simple pay back method if thepayback criteria is maximum 2 years. c) Which project Giant Machinery should choose if two methods are in conflict.1 Abusiness is considering the option of buying a plece of equipment that has a life of 5 years. The original cost of the equipment is RMS50,000 and the interest rate is 10%, It is expected that the net cash flow is RM15,000 annually and the salvage value is RMS,000. Required a. What is the NPV? b. Recommend whether the investment is feasible.CircleCo is considering the purchase of new construction crane, which would cost approximately $400,000 initially. produce cash flows of $4,500 per month for the next 8 years and has a resale value of $50,000 in assets at the end of 8 years. i With an interest rate of 4.5% what is this project's net present value? li) What is this project's Internal Rate of Return? ili) How do you use the IRR to determine if a project should be accepted?