Required: a. Determine the discounted rate of return.
Q: Define discount on forward rate
A: Answer: For a purchase, a forward rate is a contract price that will be fulfilled at a date…
Q: Define the term internal rate of return?
A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…
Q: WHAT IS THE VALUE OF DISCOUNTED FLOWS
A: As per Time value of money, there are present values as well as future values.
Q: Calculate the accounting rate of return of the new sign. Accounting rate of return %
A: Accounting Rate of Return The accounting rate of return (ARR) formula is helpful in determining the…
Q: Present using the rate of return method (ROR) with the formula. If the NPV is used to determine the…
A: Here, Net Cash Flow is 31250 Rate of Interest is 10% Initial Investment is 100000 NPV is 18462…
Q: Define return rate
A: The return rate can be calculated on various assets and can be used to compare various investments.…
Q: What is the internal rate of return?
A: Internal rate of return is the discount rate at which present value of cash inflows equals outflows…
Q: How to calculate Present Value Interest Factors?
A: PVIF is known as Present Value Interest Factor. PVIF refers to a factor that is very useful in…
Q: Identify the MARR (or external interest rate)?
A: A minimum acceptable rate of return (MARR) is the all-out advantage that a speculator wants to pick…
Q: What is the basis for the discount rate in a DCF analysis? Describe how this rate mightbe estimated.
A: Basis of discount rate in DCF analysis is to compute the PVF of future Cash Flows expected as it is…
Q: Required: i. Using present-value method, determine the best alternative ii. Using the internal rate…
A: By using present value method , debt alternative carrying interest of 10% is the best alternative…
Q: Please explain the difference between the terms interest rate and required return by defining each.
A: The amount which is charged by the lender to the borrower in order the use assets is known as the…
Q: 29.The calculations of a discount rate can be based on all the following approaches among others…
A:
Q: What is the discounted-payback method?
A: Payback period states the number of years that is taken by the project to recover the investment of…
Q: Identify and differentiate or define the types of
A: There are mainly two types of payback analysis : 1. Payback period 2. Discounted payback period
Q: What is limitation of Payback period, Net Present Value (NPV) and Internal rate of return (IRR).…
A: i) Payback period: Payback period is the expected time period which is required to recover the cost…
Q: What discount rate is used in a lessor’s NPV analysis?
A: Weighted average cost of capital is used as discount rate in Lessor's NPV analysis.
Q: Define Expected rate of return
A: Introduction: Usually return is a kind of profit that comes from your investment. Example, an amount…
Q: Describe the process of using the risk-adjusted discount rateto calculate the net present value?
A: Net present value (NPV) is the excess of present value of cash inflows over the present value of…
Q: Interest cost is calculated by multiplying the______by the ______?
A: Interest cost is calculated by multiplying the Principle amount by one plus the annual interest…
Q: The modified internal rate of return (MMIR) is the discount rate that forces the _____.
A: Explanation: Modified internal rate of return can be better understood from the below formula, where…
Q: e Internal rate of return
A: The following problem can be solved using XIRR function in excel.
Q: Compare the mutually exclusive alternatives based on the rate of return?
A: Mutually exclusive projects are the projects out of which one best project is selected due to lack…
Q: What do we mean by internal rate of return (IRR)?
A: Internal rate of return : Internal rate of return is one of the techniques used in capital budgeting…
Q: Define target payout ratio
A: SOLUTION:- A target payout ratio is a degree of the proportion of a company's profits it would want…
Q: calculate internal rate of return acounting rate of return pay back period
A: Data given: Cost of machine = RM 3,500,000 Useful life of machine = 5 years Residual value = RM…
Q: ernal rate of return and the discount rate turn pany's discount rate or internal rate of return unt…
A: To find the correct option as,
Q: a. Pay-back period b. Discounted Pay-back period c. Internal Rate of Return (IRR)
A: Payback period is the period within which the sum invested by the company in a project will be…
Q: What is net interest margin(NİM)?
A: There are various profitability ratios
Q: What are the different terms used to refer to the rate of return?
A: Rate of return is an expected profit on an investment by a investor. It is a rate at which investor…
Q: What are the features of the discounted payback period
A: DPP is the total time taken for the initial amount to equal to be the amount of discounted value of…
Q: Explain different terms are used to refer to rate of return?
A: Answer: Rate of return is nothing but the returns that are expecting on investments made by…
Q: Explain real rate of return
A: This is the raw rate of return adjusted with inflation. It is used to ascertain the effective return…
Q: What is internal rate of return (IRR) method?
A: NPV shows the excess of PV of all the cash inflows over the initial outlay of the project. It is a…
Q: Define the term Risk-Adjusted Discount Rate Approach?
A: The estimation of the present value of cash for high-risk investment is known as a risk-adjusted…
Q: Describe the Methods for Finding Rate of Return?
A: Capital budgeting is the process a company follows to decide whether to purchase a fixed asset or…
Q: Calculate the Payback period, Accounting Rate of Return and the Net Present Value (using a 17%…
A: Given:
Q: Define discounted payback period
A: The payback Period is the time duration taken to reap back the amount invested in the project. The…
Q: Define realized rate of return
A: Return can be defined as the profit or interest earned by the investor on the investment, which…
Q: Define each of the following terms: g. Reinvestment rate assumption
A: reinvestment rate: it is the return the an investor expects to make after reinvesting the cashflow…
Q: What are the four aspects of rate-of-return analysis?
A: Rate of return analysis tells the rate of return which a investment can give. It carefully analyse…
Step by step
Solved in 2 steps
- Project A costs $5,000 and will generate annual after-tax net cash inflows of $1,800 for five years. What is the NPV using 8% as the discount rate?If a copy center is considering the purchase of a new copy machine with an initial investment cost of $150,000 and the center expects an annual net cash flow of $20,000 per year, what is the payback period?Project Y cost $8,000 and will generate net cash inflows of $1,500 in year one, $2,000 in year two, $2,500 in year three, $3,000 in year four and $2,000 in year five. What is the NPV using 8% as the discount rate?
- Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?Investment A is expected to generate after-tax cash flows of $5,000 per year for 6 years and will require an initial cash outlay of $23,000. Investment B is expected to generate after-tax cash of $6,000 per year for 5 years and will require an initial cash outlay of $21,000. What is the cross-over rate? IA ONA new machine is expected to produce the following after-tax cash inflows over a period of 5 years: After-tax cash inflows Year Per Year Cumulative 1 16,000 16,000 2 12,000 28,000 3 20,000 48,000 4 8,000 56,000 5 6,000 62,000 1.If the machine will cost P40,000, its payback period is ? 2.
- Find the total present worth of a series of cash flows with an annual interest rate of 2% per year. Round your answer to the nearest cent. Initial benefit of 6,628 at year O Benefit of 13,477 at year 3 Salvage value of 2,431 at year 4Based on the following table, what is the approximate Internal Rate of Return (IRR) for a project that costs $189,000 and provides annual cash inflows of $70,000 for 3 years? (See your Chapter 25 notes, page 8) Rate of Present Value of an AnnuityReturn of $1 Received for Three Years 4% 2.8 6% 2.7 8% 2.6 10% 2.5 12% 2.4 14% 2.3 16% 2.2 20% 2.1 16 percent 10 percent 8 percent 14 percent 4 percent 20 percent 12 percent 6 percentSuppose you have the following information for a project. Year Before-Tax Income After-Tax Cash Flows Taxes Cash Flows 0 12345 -1000 500 340 244 100 100 -72 -33.6 -10.56 24 24 Calculate the present worth of after-tax cash flows. Use an interest rate of 8%. Round your answer to 2 decimal places.
- Juliana is considering an investment proposal with the following cash flows: Initial investment-depreciable assets $55,000 Net cash inflows from operations (per year for 10 years) 11,000 Disinvestment 0 a. Determine the payback period. Round your answer to one decimal place; for example, enter 1.4 for 1.44 or 1.5 for 1.45. Answer years For parts b. and c., round your answers to three decimal places if applicable. For example, enter 0.084 for 0.0844 or 0.085 for 0.0845. b. Determine the accounting rate of return on initial investment. Answer c. Determine the accounting rate of return on average investment.Determine the present worth of a maintenance contract that has a cost of $30,000 in year 1 andannual increases of 6% per year for 10 years. Use an interest rate of 6% per year. Draw a cash flow diagram.Cannonier, Inc., has identified an investment project with the following cash flows: Year Cash Flow 1 $1,050 1,280 3 1,500 4 2,240 What is the future value at a discount rate of 13 percent?