Answered: net present value of this investment.…

Business

Accounting

net present value of this investment. (PV

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 4PB

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Redbird Company is considering a project with an initial investment of $265,000 in new equipment that will yield annual net cash flows of $45,800 each year over its seven-year life. The companys minimum required rate of return is 8%. What is the internal rate of return? Should Redbird accept the project based on IRR?
Q1/ Ipswich Corporation is considering an investment opportunity with the expected net cash inflows of $300,000 for four years. The residual value of the investment, at the end of four years, would be $70,000. The company uses a discount rate of 14%, and the initial investment is $290,000. Calculate the NPV of the investment. Present value of an ordinary annuity of $1: 12% 13% | 14% | 15% 0.893 0.885 0.877 0.87 2 1.69 |1.6681.647 1.626 32.402 2.361 2.322 2.283 43.037 2.974 2.914 2.855 3.605 3.517 3.4333.352 Present value of $1: 12% 13% | 14% | 15% 0.893 0.885 0.877 0.87 20.797 0.783 0.769|0.756 30.712 0.6930.675 0.658 40.636 0.6130.592|0.572 50.567 0.543 0.519|0.497
H1. Account
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Use the following table: Present Value of an Annuity of 1 Period 8% 9% 10% 1 .926 .917 .909 2 1.783 1.759 1.736 3 2.577 2.531 2.487 A company has a minimum required rate of return of 8%. It is considering investing in a project that costs $111,915 and is expected to generate cash inflows of $45,000 each year for three years. The approximate internal rate of return on this project is a)8% B)9% C)10% D)less than the required 8%.
Tricorp Company is considering an investment that is expected to return $320,000 after four years. If Tricorp demands a 15% return, what is the most that it will be willing to pay for this investment? 15%, 4 years annually Factor Present value of a $1 0.572 Future value of $11.749 Present value of an annuity 2.855 Future value of an annuity 4.993 a. $320,000 b. $177,696 c. $183,040 d. $45,216 e. $278,272
Use the following table for this questio Present value of an Annuity of $1 Periods 8% 9% 10% 1 .926 .917 .909 2 1.783 1.759 1.736 3 2.577 2.531 2.487 A company has a minimum required rate of return of 9% and is considering investing in a project which costs $25,000 and is expected to generate cash inflows of $10,000 at the end of each year for three years. The net presentvalue of this project is: a. $25,310 b. $15,000 c. $9,170 d. $5,310
1. Use the following table, Present Value of an Annuity of 1 Period 8% 9% 10% 1 0.926 0.917 0.909 2 1.783 1.759 1.736 3 2.577 2.531 2.487 A company has a minimum required rate of return of 9%. It is considering investing in a project which costs $300000 and is expected to generate cash inflows of $120000 at the end of each year for three years. The net present value of this project is a. $3720. b. $303720. c. $30372. d. $60000. 2. Pierre’s Hair Salon is considering opening a new location in French Lick, California. The cost of building a new salon is $271,000. A new salon will normally generate annual revenues of $64,015, with annual expenses (including depreciation) of $41,200. At the end of 15 years the salon will have a salvage value of $80,000.Calculate the annual rate of return on the project. Annual rate of return enter the Annual rate of return in percentages %?
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
Consider two competing projects, for which MARR = 12%: Initial Equivalent Investment, P Annuity, A $100000 $23000 $100000 $35000 Project Project A Project B Duration 9 years 4 years ROR i* % 17.7% 15% According to the RoR method, Project A is preferable. However, the company will be able to reinvest the future cash flows at rate 25%, compounded annually. Is Project A still preferable?
The Long-line Machine Company is evaluating a capital expenditure proposal that requires an initial investment of $50,000 and has predicted cash inflows of $8,000 per year for 10 years. It will have no salvage value. Present value factor of an annuity n= 10, I=(%16) 4.833 Present value factor of an annuity n= 10, I=(%26) 3.465 Required: a. Using a required rate of return of 16%, determine the net present value of the investment proposal. b.Determine the proposal's internal rate of return. c. What is the Payback period? d. What would you advice Long-line company?