Problem 12-6 Spreadsheet Problem: Project Cash Flows (LG12-3)KADS, Incorporated has spent $430,000 on research to develop a new computer game. The firm is planning to spend $230,000 on amachine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated using bonusdepreciated; they total $53,000. The machine has an expected life of three years, a $78,000 estimated resale value, and falls underthe MACRS seven-year class life. Revenue from the new game is expected to be $630,000 per year, with costs of $280,000 per year.The firm has a tax rate of 21 percent, has an opportunity cost of capital of 12 percent, and expects net working capital to increase by$115,000 at the beginning of the project.What will the cash flows for this project be?Note: Negative amounts should be indicated by a minus sign. Round your answers to decimal places.Answer is complete but not entirely correct.FCFYear012$(398,000.00)S284,992.55$291,054.413470,285.57

Part 2: Explanation:Step 1: Calculate Initial Investment (Year 0):The initial investment includes…

Answered: Problem 12-6 Spreadsheet Problem:…

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Chapter9: Capital Budgeting Techniques

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Problem 12-6 Spreadsheet Problem: Project Cash Flows (LG12-3) KADS, Incorporated has spent $500,000 on research to develop a new computer game. The firm is planning to spend $300,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated using bonus depreciated; they total $60,000. The machine has an expected life of three years, a $85,000 estimated resale value, and falls under the MACRS seven-year class life. Revenue from the new game is expected to be $700,000 per year, with costs of $350,000 per year. The firm has a tax rate of 21 percent, has an opportunity cost of capital of 11 percent, and expects net working capital to increase by $150,000 at the beginning of the project. What will the cash flows for this project be? Note: Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. Year FCF 0 2 3
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Question z You are working as a finance manager for Fire Fox Transport Ltd. The company is considering to invest in one of the two following projects to buy a new equipment for their storage which is expected to boost the company’s revenue. Each equipment will last 5 years and have no salvage value at the end. The company’s required rate of return for all investment projects is 9.5%. The cash flows of the projects are provided below. Equipment 1 Equipment 2 Cost $157,000 $182,000 Future Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5 67 000 82 000 78 000 64 000 56 000 83 000 94 000 80 000 77 000 73 000 Required: a) Identify which option of equipment should the company accept based on Net Present Value (NPV) method? b) Identify which option of equipment should the company accept based on discounted pay back method if the payback criterion is maximum 3…
Basic Concepts Sato Company is considering an investment in equipment that is capable of producing more efficiently than the current technology. The outlay required is $2,200,000. The equipment is expected to last five years and will have no salvage value. The expected cash flows associated with the project are as follows: Year Cash Revenues Cash Expenses 1 $2,940,000 $2,280,000 2 2,940,000 2,280,000 3 2,940,000 2,280,000 4 2,940,000 2,280,000 5 2,940,000 2,280,000 The present value tables provided in Exhibit 19B.1 and Exhibit 19B.2 must be used to solve the following problems. Required: 1. Compute the project's payback period. If required, round your answer to two decimal places.fill in the blank 1 years 2. Compute the project's accounting rate of return. Enter your answer as a whole percentage value (for example, 16% should be entered as "16" in the answer box).fill in the blank 2 % 3. Compute the project's net present value, assuming a required rate of return of 10…
QUESTION 4 Hook n' Crook, Inc. has a 2-year project with the following cash flows: I=-$1,000, C₁ = +$5489, and C₂ =-$-4490. Find the value of the LARGEST IRR of this project. Note: If you wish, you may use the calculator to find one of the IRRS, and then use a method given in your class notes to find the other one, so you can determine which one is the largest number. Give the answer as a percent with two decimals; e.g., 23.24 and, as always, do not include symbols in your answer.
Question 1 Booth Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of tractors. The outlay required is $960,000. The NC equipment will last 5 years with no expected salvage value. The expected after-tax cash flows associated with the project follow: Year Cash Revenues Cash Expenses 1 $1,275,000 $900,000 1,475,000 1,015,000 3 1,650,000 1,200,000 4 1,358,000 1,118,000 5 1,550,000 1,225,000 Required: A. Compute the payback period for the NC equipment. B. Compute the NC equipment's ARR. C. Compute the investment's NPV, assuming a required rate of return of 10%. D. Compute the investment's IRR.
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ic Yo NS io cer ist bun ngs nnée Current Attempt in Progress Blossom Manufacturing Co. is evaluating two projects. The company uses payback criteria of three years or less. Project A has a cost of $905,000, and project B's cost is $1,247,300. Cash flows from both projects are given in the following table. Year 1 2 3 4 Project A $86,212 313,562 427,594 285,552 Project B $586,212 413,277 231,199 What are their discounted payback periods? (Round answers to 2 decimal places, e.g. 15.25. If discounted payback period exceeds life of the project, enter 0.00 for the answer.) Discounted payback period of project A Discounted payback period of project B will he accepted with a discount rate of 8 percent? átv zoom
8.2-15 Question Help The Sisyphean Company is planning on investing in a new project. This will involve the purchase of some new machinery costing $440,000. The Sisyphean Company expects cash inflows from this project as detailed below: Year 1 Year 2 Year 3 Year 4 $200,000 $225,000 $275,000 $200,000 The appropriate discount rate for this project is 15%. The net present value (NPV) for this project is closest to: A. $199,213 B. $498,032 C. $209,174 D. $139,449
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Problem 6 - Shirt Corporation is considering purchasing equipment that costs $60,000 and is expected to provide the following cash inflows over its five-year useful life: Year Cash Inflow 1 $18,000 2 $22,000 3 $24,000 4 $16,000 5 $ 9,000 Calculate the payback period for this investment.

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