Answered: present worth method

Business

Accounting

present worth method

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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You are choosing between two projects. The cash flows for the projects are given in the following table ($ million): a. What are the IRRs of the two projects? b. If your discount rate is 4.6%, What are the NPVs of the two projects? c. Why do IRR and NPV rank the two projects differently? **round to one decimal place**
Suppose that we make contributions to a fund of $125 today and $750 in twoyears for a return of $1000 in one year. First write the Net Present Value as a function of the discount factor ν. Secondly, use the NPV to calculate the yield rate of this investment (select the larger value for i. Finally, explain whether or not this is a good investment for us. Please show all work
A company is considering three alternative investment projects with different net cash flows. The present value of net cash flows is calculated using Excel and the results follow. Potential Projects Present value of net cash flows (excluding initial investment) Initial investment Project A $ 11,226 (10,000) Project B $ 10,568 (10,000) a. Compute the net present value of each project. b. If the company accepts all positive net present value projects, which of these will it accept? c. If the company can choose only one project, which will it choose on the basis of net present value? Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute the net present value of each project. Potential Projects Project A Project B Project C Present value of net cash flows Initial investment Net present value $ $ $
The management of NUBD Co. is considering three investment projects-W, X, and Y. Project W would require an investment of P21,000, Project X of P66,000, and Project Y of P95,000. The present value of the cash inflows would be P22,470 for Project W, P73,920 for Project X, and P98,800 for Project Y. Rank the projects according to the profitability index, from most profitable to least profitable. *
Below are four cases that you will have to solve using Excel spreadsheets. 1st case The company COMERCIAL SA has two investment alternatives that present the following information: PROJECT A B It is requested Initial investment. $25,000 $22,000 Cash flows year 1 1. Determine the internal rate of return. 2. Determine the present value. $7,000 $12,000 The discount rate for the project will be 10% and the MARR will be 20%. 3. Determine the recovery period. 4. Define which is the most viable project. Year 2 cash flows $15,000 $8,000 Year 3 cash flows $18,000 $12,000
In my accounting class I am learning to find accounting rate of return. To solve for this I subtracted net cash flow- the salvage value divided by the initial investment. Have I done something incorrect?
(Present value of an uneven stream of payments) You are given three investment alternatives to analyze. The cash flows from these three investments are shown in the popup window: Assuming a discount rate of 16 percent, find the present value of each investment. a. What is the present value of investment A at 16 percent annual, discount rate? S (Round to the nearest cènt.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) INVESTMENT B END OF YEAR 1 23456TBLG 7 8 9 10 A $18,000 18,000 18,000 18,000 18,000 $18,000 18,000 18,000 18,000 18,000 18,000 C $18,000 90,000 18,000 -
You are choosing between two projects. The cash flows for the projects are given in the attached table ($miilion) . a. What are the IRRs of the two projects? (A &B) b. If your discount rate is 4.9%,what are theNPVs of the two projects? (A & B) c. Why do IRR and NPV rank the two projects differently?
Decision D6, which has three possible choices (X, Y, or Z), must be made in year 3 of a 6-year study period in order to maximize E(PW). Using an MARR of 18% per year, the investment required in year 3, and the estimated cash flows for years 4 through 6, determine which decision should be made in year 3. D6 X Y Z High (X) Low (X) High (Y) Low (Y) High High (Z) Low (Z) Low High Low High Investment, Cash Flow, (Year Cash Flow, $1000 Year 3 3) (Year 4) 3 4 $-260,000 $50 $40 $30 $30 $190 $-30 Low $-52,000 $-250,000 The present worth of X is $ The present worth of Y is $ The present worth of Z is $ Select decision branch Y Cash Flow, $1000 (Year 5) 5 $50 $30 $40 $30 $170 $-30 Cash Flow, $1000 (Year 6) 6 $50 $20 $50 $30 $150 $-30 Outcome Probability 0.72 0.28 0.45 0.55 0.7 0.3
Goergen Corporation is considering a capital budgeting project that would require an initial investment of $700,000. The investment would generate annual cash inflows of $267,000 for the life of the project, which is 4 years. The company's discount rate is 10%. The net present value of the project is closest to: Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Multiple Choice $368,000 $700,000 $846,123 $146,123
KAPE Enterprises is trying to select the best investment from among four alternatives. Each alternative involves an initial outlay of 100,000. Their cashflows as follow: Year A B C D 1 10,000 50,000 25,000 0 2 20,000 40,000 25,000 0 3 30,000 30,000 25,000 45,000 4 40,000 0 25,000 55,000 5 50,000 0 25,000 60,000 Evaluate and rank each alternative based on: discounted payback period (use a 10% for cost of capital), net present value (use 10% discount rate) internal rate of return