QI\ a contractor want to invest his money in one of projects A or B if you know that the interest rate is10%, choose the best altemative A or B using net present worth method ?A.B.Initial Investment120,000 CU135,000 CUAnnual revenueAnnual expensesSalvage vahie|Project lifeCost of machines replacedevery 3 years15,000 CU\year10,000 CU year12,000 CU12 years17,000 CU year11,000 CU year20,000 CU6 усars3500 CU3000 CUQ2 A company is planning to purchase a new equipment to increase the production and revemies. The cost ofthe equipment is 451105 CU and the equipment installation cost is 17% of its cost. Find the payback period forthis equipmentYear 1Year 2120,000 CU 130,000 CU 90,000 CUYear 3Year 4|100,000 CUYear 5115,000 CU 90,000 CUYear 6Q3 \ Machinery costs (60000 CU) and its useful life is (5 year). compute the schedule of depreciation and bookvalue at the end of each year for the machinery by using the Sum of Year Digit method , if you know that thedepreciation value for the frst year is (15000 CU).Q4) A company is planning to expand its production operations, it has two alternatives which has the cash flowas represent in the tabe below, suggest the best Project using the Equivalent Annual worth Method if you knowthat the interest rate is (14%).equipment'sInstallationSalvageDetailsexpensesLiferevenuevalue(CU)costcost(CU)(CU)(CU/year)(CU/year)(year)Project 1Project 2All projects need a maintenance for some machines every three years which equals to 100 000 cu for bothprojects. There is a revenue in the 3rd year of project 2 equal to 250 000 CU There is a revenue in the 4th year of2,200,000400,000400,000100,000300,0001,900,000300,000620,000150,000500,0003project 1 equal to 170 000 CU.

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QI\ a contractor want to invest his money in one of projects A or B if you know that the interest rate is 10%, choose the best alemative A or B using net present worth method ? Initial Investment 120,000 CU 135,000 CU Annual revenue Annual expenses Salvage vahie Project life Cost of machines replaced every 3 years 15,000 CU'year 10,000 CU year 12,000 CU 12 years 3000 CU 17,000 CU year 11,000 CU year 20,000 CU 6 усars 3500 CU

QI\ a contractor want to invest his money in one of projects A or B if you know that the interest rate is 10%, choose the best alemative A or B using net present worth method ? Initial Investment 120,000 CU 135,000 CU Annual revenue Annual expenses Salvage vahie Project life Cost of machines replaced every 3 years 15,000 CU'year 10,000 CU year 12,000 CU 12 years 3000 CU 17,000 CU year 11,000 CU year 20,000 CU 6 усars 3500 CU

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

Section: Chapter Questions

Problem 1PS

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Saved Help Save & Prairie Corporation has provided the following information for a proposed investment project: Discount rate 10% Life of the project 4 years Initial investment cost $23,775 Annual cost savings 7,500 Salvage value 1,500 What is the net present value of the proposed investment project? (Select the answer that is closest to your calculations.) Present value tables are provided below. Present Value of $1 Table (Exhibit 11B-1) (Partial table) Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.812 0.797 0.783 0.769 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 0.519 4. 0.790 0.746 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.456 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.731 0.677 0.627 0.582 0.540…
Consider two air-conditioning systems with the cash flow estimates as given below. Use AW analysis to determine the sensitivity of the economic decision to MARR values of 4%, 6%, and 8% per year. Air-Conditioning System 1 System First cost, $ AOC, $ per year Salvage value, $ New compressor and motor cost at midlife, $ Life, years -10,000 -500 -100 -1,850 8 The annual worth of air-conditioning system 1 when the MARR is 4% is $ The annual worth of air-conditioning system 2 when the MARR is 4% is $ The annual worth of air-conditioning system 1 when the MARR is 6% is $ The annual worth of air-conditioning system 2 when the MARR is 6% is $ The annual worth of air-conditioning system 1 when the MARR is 8% is $ The annual worth of air-conditioning system 2 when the MARR is 8% is $ Air-Conditioning System 2 -14,000 -85 -300 -2,540 12
Two mutually exclusive investment altematives for implementing an office automation plan in an engineering design firm are being considered. If the firm's MARR is 10% per year, which alternative should be selected? Compare the alternatives shown below on the basis of Incremental Analysis. Investment A Investment B Capital Investment, S Annual Expenses, S/yr. 920,000 660,000 167,000 133,000 Salvage value, S 410,000 330,000 Life, years 10 10 Determine IRR on incremental analysis, using 7% and 13% rates. Oa86% Ob 11.1% 10.9% Od.95%
onsider the following financial informationabout a retooling project at a computer manufacturing company:• The project costs $2.5 million and has a five-yearservice life.• The retooling project can be classified as sevenyear property under the MACRS rule.• At the end of the fifth year, any assets held for theproject will be sold. The expected salvage valuewill be about 10% of the initial project cost.• The firm will finance 40% of the project moneyfrom an outside financial institution at an interestrate of 10%. The firm is required to repay the loanwith five equal annual payments.• The firm’s incremental (marginal) tax rate on theinvestment is 35%.• The firm’s MARR is 18%.With the preceding financial information,(a) Determine the after-tax cash flows.(b) Compute the annual equivalent worth for thisproject.
Please view the following video before answering this question. Video Example 4.3 Click here to access the TVM Factor Table Calculator Consider a palletizer at a bottling plant that has a first cost of $141,000, operating and maintenance costs of $16,500 per year, and an estimated net salvage value of $23,500 at the end of 33 years. Assume an interest rate of 6.00%. What is the present equivalent cost of the investment if the planning horizon is 33 years? O $387,900 O $362,900 O $372,363 O $423,400
Porter Company is analyzing two potential Investments. Project X $ 97,090 Initial investment Net cash flow: Year 1 Year 2 Year 3 Year 4 Multiple Choice If the company is using the payback period method, and it requires a payback of three years or less, which project(s) should be selected? O 32,500 32,500 32,500 0 Both X and Y are acceptable projects. O Project Y. Project Y $ 77,000 Project Y because it has a lower Initial Investment. Project X 5,700 34,500 34,500 25,000 Neither X nor Y is an acceptable project.
Compare three alternatives on the basis of their capitalized costs at /= 8% per year and select the best alternative. Alternative E F G $-460,000 $-30,000 $90,000 4 First Cost AOC, per Year Salvage Value Life, Years $-80,000 $-65,000 $40,000 2 The capitalized cost of alternative E is $ The best alternative is (Click to select) ▼ alternative F is $ $-960,000 $-3,000 $450,000 ∞0 and alternative G is $
Harris Corporation has provided the following data concerning an investment project that it is considering: Initial investment Annual cash flow Salvage value at the end of the project Expected life of the project Discount rate $ 160,000 $ 54,000 $ 11,000 O $67,000 O $160,516 O $516 O $(5,776) 4 15 per year years % Use Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the project is closest to:
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
Question Completion Status: The XYZ Company is considering investing in two alternative projects: Project 1 W $400,000 5 B. C. D. Investment Useful life (years) Estimated annual net cash inflows for useful life Residual value Depreciation method Required rate of return What is the payback period for Project 2? 16.00 years 4.00 years 5.00 years 4.70 years $100,000 $25,000 Straight- line 12% Project 2 $250,000 6 $50,000 $15,000 Straight- line 8%
Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return Blaylock Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of trenching machines. The outlay required is $700,000. The NC equipment will last five years with no expected salvage value. The expected after-tax cash flows associated with the project follow: Year Cash Revenues Cash Expenses 1 $1,300,000 $1,100,000 2 1,300,000 1,100,000 3 1,300,000 1,100,000 4 1,300,000 1,100,000 5 1,300,000 1,100,000 Required: Compute the investment's Net Present Value, assuming a required rate of return of 10 percent. Round present value calculations and your final answer to the nearest dollar.NPV = $fill in the blank 1
Perit Industries has $155,000 to invest in one of the following two projects: Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project Project A $ 155,000 $ 25,000 $ 8,600 6 1. Net present value project A 2. Net present value project B 3. Which investment alternative (if either) would you recommend that the company accept? X Answer is complete but not entirely correct. Project B $0 $ 155,000 $ 40,000 years The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries' discount rate is 14%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project A. Note: Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount. 2. Compute the net present value of Project B. $(53,971) 70,527 X Project B $0…

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