Accounting project A is currently being considered by company Project A is currently being considered by company. Ithas the following project cash flows:Year Project A0-$500,0001150,0002150.0003185.0004185,000The required rate of return for this project is 10 percent.For each of the following methods show all yourcalculations and specify if the project would be chosenfor EACH method:A. Payback Period: Hurdle rate: 3.25 years. Accept orReject?B. Discounted Payback Period: Hurdle rate: 3.5 years.Accept or Reject?

Step 1: Introduction to capital budgetingCapital budgeting refers to the process of analyzing…

Answered: Project A is currently being considered…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 19EA: Redbird Company is considering a project with an initial investment of $265,000 in new equipment...

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Staten Corporation is considering two mutually exclusive projects. Both require an initial outlay of 150,000 and will operate for five years. The cash flows associated with these projects are as follows: Statens required rate of return is 10%. Using the net present value method and the present value table provided in Appendix A, which of the following actions would you recommend to Staten? a. Accept Project X and reject Project Y. b. Accept Project Y and reject Project X. c. Accept Projects X and Y. d. Reject Projects X and Y.
There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment or $28.000 and is expected to generate the following cash flows: If the discount rate is 5% compute the NPV of each project and make a recommendation of the project to be chosen.
Calculate the net present value of the following project for discount rates of 10,20 and 40 percent. Based on the NPVs you obtain, under which discount rates do you accept this project? Show your calculations. Cash Flows ($) Year 1 -7000 Year 2 4000 Year 3 19,000 NPV formula: NPV=sum_(t=0)^(n)(EATCF)/((1+k)^(t)) dution:-
ed Your company has a project available with the following cash flows: Year Cash Flow 0 -$80,900 12345 21,600 25,200 31,000 26,100 20,000 If the required return is 15 percent, should the project be accepted based on the IRR?
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A project has cash flows of -$35,000, $0, $10,000, and $42,000 for Years 0 to 3, respectively. The required rate of return is percent, you should the project. 15 percent. Based on the internal rate of return of O 24.76; accept O 13.96; accept O 14.92; reject O 15.21; accept A Click Submit to complete this assessment. Question 30 of 30 Save and Submit
The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (1) Cash Flow (II) -$ -$ 0 55,000 1 25,000 2 25,000 3 25,000 a-1. If the required return is 10 percent, what is the profitability index for both projects? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) Project I Project II 18,900 10,150 10,150 10,150 a- If the company applies the profitability index decision rule, which project should the 2. firm accept? Project I O Project II Project I Project II 1. b- What is the NPV for both projects? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flow 0. -$ 41,000 20,000 23,000 14,000 1 3. What is the NPV of the project if the required return is 11 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g.., 32.16.) NPV At a required return of 11 percent, should the firm accept this project? No O Yes What is the NPV of the project if the required return is 24 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
The cash flows associated with an investment project are as follows: Project Y (200 000) 100 000 Year 100 000 120 000 110 000 The discount rate is 8 percent. What's the discount payback period of the projects? (compile a spreadsheet) Calculate NPV, PI of a projects Calculate IRR of a projects Should the firm accept the project? a) b) c) d) 01234
Find internal rate of return of a project with an initial cost of $43,000, expected net cash inflows of $9,550 per year for 8 years, and a cost of capital of 10.50%.Round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72. Group of answer choices 15.05% 14.60% 14.90% 16.24% 17.73%
A project has the following cash flows set out below. What is the profitability index of this project if the relevant discount rate is 2 percent? Enter your final answer to two decimal places. Year Cash flow 0 -1,745 1 537 2 2,066 3 3,912
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