NPV and IRR The first two scenarios are independent. All cash flows are after-tax cash flows. The present value tables provided in Exhibit 198.1 and Exhibit 198.2 must be used to solve the following problems. Required: 1. Patz Corporation is considering the purchase of a computer-aided manufacturing system. The cash benefits will be $800,000 per year. The system costs $4,000,000 and will last eight years. Compute the NPV assuming a disco percent. $ Should the company buy the new system? Yes ✓ 2. Amy Wetzel has just invested $270,000 in a restaurant specializing in German food. She expects to receive $43,470 per year for the next eight years. Her cost of capital is 5.5 percent. Compute the internal rate of return. Ent answer as a whole percentage value (for example, 16% should be entered as "16" in the answer box). X% Did Amy make a good decision? Yes ✓ 3. For each of the previous two requirements, choose the data analytic type that applies and explain why (descriptive, diagnostic, predictive, or prescriptive). Note: More than one analytic type might apply. See Exhibits 2.5 and -40, for a brief review of data analytics.

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
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NPV and IRR
The first two scenarios are independent. All cash flows are after-tax cash flows.
The present value tables provided in Exhibit 19B.1 and Exhibit 19B.2 must be used to solve the following problems.
Required:
1. Patz Corporation is considering the purchase of a computer-aided manufacturing system. The cash benefits will be $800,000 per year. The system costs $4,000,000 and will last eight years. Compute the NPV assuming a discount rate of 10
percent.
Should the company buy the new system?
Yes
2. Amy Wetzel has just invested $270,000 in a restaurant specializing in German food. She expects to receive $43,470 per year for the next eight years. Her cost of capital is 5.5 percent. Compute the internal rate of return. Enter your
answer as a whole percentage value (for example, 16% should be entered as "16" in the answer box).
X %
Did Amy make a good decision?
Yes
3. For each of the previous two requirements, choose the data analytic type that applies and explain why (descriptive, diagnostic, predictive, or prescriptive). Note: More than one analytic type might apply. See Exhibits 2.5 and 2.6, pp. 37,
40, for a brief review of data analytics.
Predictive and Prescriptive ✓
Transcribed Image Text:NPV and IRR The first two scenarios are independent. All cash flows are after-tax cash flows. The present value tables provided in Exhibit 19B.1 and Exhibit 19B.2 must be used to solve the following problems. Required: 1. Patz Corporation is considering the purchase of a computer-aided manufacturing system. The cash benefits will be $800,000 per year. The system costs $4,000,000 and will last eight years. Compute the NPV assuming a discount rate of 10 percent. Should the company buy the new system? Yes 2. Amy Wetzel has just invested $270,000 in a restaurant specializing in German food. She expects to receive $43,470 per year for the next eight years. Her cost of capital is 5.5 percent. Compute the internal rate of return. Enter your answer as a whole percentage value (for example, 16% should be entered as "16" in the answer box). X % Did Amy make a good decision? Yes 3. For each of the previous two requirements, choose the data analytic type that applies and explain why (descriptive, diagnostic, predictive, or prescriptive). Note: More than one analytic type might apply. See Exhibits 2.5 and 2.6, pp. 37, 40, for a brief review of data analytics. Predictive and Prescriptive ✓
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