Question 3 (4 points) Lady Min Corporationis evaluating the purchase of P500,000 dieattach machine. The cash inflows expectedfrom the investment is P145,000 per yearfor five years with no equipment salvagevalue. The cost of capital is 12%. The netpresent value factor for five (5) years at 12%is 3.6048 and at 14% is 3.4331. The internalrate of return for this investment is: *Your answer

Solution: Present value factor at IRR = Initial investment / Annual cash inflows = P500,000 /…

Answered: Question 3 (4 points) Lady Min…

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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4. Develop ATCF table for Problem 3, if 50% of the initial investment is borrowed at 5% interest rate per year to be paid back in 4 equal installments. (No need to calculate PW) 3. An investment of $500,000 generates an annual income of$150,000 over the next4 years with a salvage value of$200,000. At MARR-10% is this a good investment (by computing P.W. factor)? The effective tax rate is 40% and MACRS depreciation with depreciation life of 3 years is employed.
Engineering Economics 00012 Please use the Rate of Return (ROR) Solution
1otal Investment in the Project ration : A project requires an investment of 7.20.000 and a scrap value of 20,000 after five years. It is expected to yield profits after depreciation & taxes during five years amounting to 65,000; 25.000: 80.000, 3 70,000 and 90,000. Calculate the average rate of return on the investment. tion:
2. Find the amount of years for project A and B
1a.Compute the net present value of this investment.b. Should Beyer accept the investment?
The proposed expansion of CIV Electronics' plant facilities requires the immediate outlay of $102,000. Expected net returns are given in the following table. Calculate the internal rate of return (IRR) Year 1 Year 2 Year 3 $Nil $24,000 $30,000 Year 4 Year 5 Year 6 The internal rate of return is%. (Round to the nearest tenth as needed.) $53,000 $48,000 $17,000
NPV (net present value) Craig is considering several capital investments for the upcoming year. Use the NPV (net present value) method to determine whether the company should investment in the following independent projects: Project 1 costs $28,000 and offers 8 annual cash flows of $8,600. Craig feels this type of investment should require an annual return of 16% on projects like this. Project 2 costs $35,000 and offers 6 annual cash flows of $12,000. Craig feels this type of investment should require an annual return of 12% on projects like this. Requirements 1. Calculate the NPV of both of these projects 2. What is the maximum acceptable price Craig should pay for each of these projects?
Please do not give solution in image format thanku
Problem 3: A banking service project has an investment of $875,000. It has profits of $335,000 in years 1,3,5,7, and 9, and $157,000 in years 2,4,6,8,and 10. Assume the required rate of return is 20% and the inflation rate is 2.5%. Using the Net Present Value method, determine if the banking company should invest in this project.
Q1/ Ipswich Corporation is considering an investment opportunity with the expected net cash inflows of $300,000 for four years. The residual value of the investment , at the end of four years, would be $70,000. The company uses a discount rate of 14\% and the initial investment is $290,000. Calculate the NPV of the investment.
What is Question Four a. Assume that Green Housing Company is considering an investment of $200,000 in a new at the end of its useful life. The annual cash inflows are £250,000, and the annual cash outflows equipment. The new equipment is expected to last 12 years. It will have a zero salvage value are 150,000. Assume that the annual cash flows are uniform over the asset's useful life. Management has a required rate of return of 18%. i. Calculate the present value of net cash flows ii. Calculate the net present value for this investment iii. Calculate the Discounted Payback Period iv. Advice management of Green Housing Company base on your results
#2 Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.72 million and create incremental cash flows of $434,915.00 each year for the next five years. The cost of capital is 9.16%. What is the internal rate of return for the J-Mix 2000? Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))

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