MIRR unequal lives. Singing Fish Fine Foods has $1,850,000 for capital investments this year and is considering two potential projects for the funds. Pröject 18 updabng the Blaras den secION TO DOUmOn estimated after-tax cash flow of this project is $620,000 per year for the next five years. Project 2 is updating the store's wine section. The estimated annual after-tax cash flow for this project is $510,000 for the next six years. The appropriate discount rate for the deli expansion is 9.7% and the appropriate discount rate for the wine section is 8.8%. What are the MIRRS for the Singing Fish Fine Foods projects? What are the MIRRS when you adjust for unequal lives? Do the MIRR adjusted for unequal lives change the decision based on MIRRS? Hint Take all cash flows to the same ending period as the longest project. If the appropriate reinvestment rate for the deli expansion is 9.7%, what is the MIRR of the deli expansion? % (Round to two decimal places.)

MIRR unequal lives. Singing Fish Fine Foods has $1,850,000 for capital investments this year and is considering two potential projects for the funds. Pröject 18 updabng the Blaras den secION TO DOUmOn estimated after-tax cash flow of this project is $620,000 per year for the next five years. Project 2 is updating the store's wine section. The estimated annual after-tax cash flow for this project is $510,000 for the next six years. The appropriate discount rate for the deli expansion is 9.7% and the appropriate discount rate for the wine section is 8.8%. What are the MIRRS for the Singing Fish Fine Foods projects? What are the MIRRS when you adjust for unequal lives? Do the MIRR adjusted for unequal lives change the decision based on MIRRS? Hint Take all cash flows to the same ending period as the longest project. If the appropriate reinvestment rate for the deli expansion is 9.7%, what is the MIRR of the deli expansion? % (Round to two decimal places.)

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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K (Cost of short-term financing) The R. Morin Construction Company needs to borrow $100,000 to help finance the cost of a new $140,000 hydraulic crane used in the firm's commercial construction business. The crane will pay for itself in 1 year, and the firm is considering the following alternatives for financing its purchase: Alternative A-The firm's bank has agreed to lend the $100,000 at a rate of 12 percent. Interest would be discounted, and a 16 percent compensating balance would be required. However, the compensating-balance requirement would not be binding on R. Morin because the firm normally maintains a minimum demand deposit (checking account) balance of $25,000 in the bank. Alternative B-The equipment dealer has agreed to finance the equipment with a 1-year loan. The $100,000 loan would require payment of principal and interest totaling $115,560. a. Which alternative should R. Morin select? b. If the bank's compensating-balance requirement were to necessitate idle demand…
NPV unequal lives. Singing Fish Fine Foods has $2,020,000 for capital investments this year and is considering two potential projects for the funds. Project 1 is updating the store's deli section for additional food service. The estimated after-tax cash flow of this project is $610,000 per year for the next five years. Project 2 is updating the store's wine section. The estimated annual after-tax cash flow for this project is $480,000 for the next six years. If the appropriate discount rate for the deli expansion is 9.4% and the appropriate discount rate for the wine section is 8.9%, use the NPV to determine which project Singing Fish should choose for the store. Adjust the NPV for unequal lives with the equivalent annual annuity. Does the decision change? If the appropriate discount rate for the deli expansion is 9.4%, what is the NPV of the deli expansion? $4 (Round to the nearest cent)
1. CB Electronix needs to expand its plant. It is considering an alternative plan that will last indefinitely. The MARR is 15%. Please determine the capitalized cost of the alternative. Alternative: Expand by 20 000 square feet First cost = $2 000 000 Annual Maintenance costs = $10 000 per year starting in year 3 Periodic maintenance costs = $15 000 every 15 years, starting in 20 years
Demco Products, a company that manufactures stainless steel control valves, has a fund for equipment replacement that contains $500,000. The company plans to spend $85,000 each year on new equipment. (a) Estimate the number of years it will take to reduce the fund to no more than $85,000 at an interest rate of 10% per year. (b) Use the NPER function to determine the exact number of years.
Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from today. The annual discount rate for these investments is 12%. The following table summarizes the initial cost and the sale price in three years for each property: Cost Today Sale Price in Year 3 $520,000 $1,020,000 Parkside Acres 870,000 1,470,000 Real Property Estates Lost Lake Properties 910,000 510,000 220,000 Overlook 20,000 Kartman has a total capital budget of $540,000 to invest in properties. Which properties should it choose? ... The profitability index for Parkside Acres is (Round to two decimal places.)
Please see attached:
Riggs Corp. management is planning to spend $650,000 on a new marketing campaign. They believe that this action will result in additional cash flows of $276,000 over the next three years. If the discount rate is 17.5 percent, what is the NPV on this project?(Enter negative amounts using negative sign e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to 2 decimal places, e.g. 15.25.) The NPV is $ Crescent Industries management is planning to replace some existing machinery in its plant. The cost of the new equipment and the resulting cash flows are shown in the accompanying table. If the firm uses an 18 percent discount rate for project. Year Cash Flow 0 -$3,485,400 1 $871,710 2 $896,700 3 $1,104,400 4 $1,340,360 5 $1,450,600 What is the NPV of this project?(Enter negative amounts using negative sign e.g. -45.25. Do not round discount factors. Round intermediate calculations to 4 decimal places,…
Please provide a step-by-step solution. Thanks
mni.9
Star City is considering an investment in the community center that is expected to return the following cash flows: Use Exhibit A.8. Year Net Cash Flow 1234in 5 $ 28,000 58,000 88,000 88,000 108,000 This schedule includes all cash inflows from the project, which will also require an immediate $208,000 cash outlay. The city is tax-exempt; therefore, taxes need not be considered. Required: a. What is the net present value of the project if the appropriate discount rate is 22 percent? (Round PV factor to 3 decimal places. Negative amount should be indicated by a minus sign.) Net present value
Nicholson Roofing Materials, Inc., is considering two mutually exclusive projects, that both cost $100,000. The company's board of directors has set a 4-year payback requirement the cost of capital is 10%. The project cash flows are shown in the following table: Cash flows (CF Subscript t) Year Project A Project B 1 $30,000 $85,000 2 $30,000 $50,000 3 $30,000 $10,000 4 $30,000 $10,000 5 $30,000 $10,000 6 $30,000 $10,000 a. Calculate the payback period for each project. Rank the projects by payback period. b. Calculate the NPV of each project. Rank the project by NPV. c. Calculate the IRR of each project. Rank the project by IRR. d. Make a recommendation.

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