Required information Problem 24-2A (Algo) Payback period, accounting rate of return, net present value, and net cash flow calculation LO P1, P2, P3 [The following information applies to the questions displayed below.] Project Y requires a $301,500 investment for new machinery with a four-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Years 1-4 Problem 24-2A (Algo) Part 4 4. Determine Project Y's net present value using 9% as the discount rate. (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Initial investment Net present value Net Cash Flows x Project Y $ 395,000 Present Value of Annuity at 9% 176,960 75,375 28,000 $ 114,665 Present Value of Net Cash Flows $

Required information Problem 24-2A (Algo) Payback period, accounting rate of return, net present value, and net cash flow calculation LO P1, P2, P3 [The following information applies to the questions displayed below.] Project Y requires a $301,500 investment for new machinery with a four-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Years 1-4 Problem 24-2A (Algo) Part 4 4. Determine Project Y's net present value using 9% as the discount rate. (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Initial investment Net present value Net Cash Flows x Project Y $ 395,000 Present Value of Annuity at 9% 176,960 75,375 28,000 $ 114,665 Present Value of Net Cash Flows $

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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Required information. [The following information applies to the questions displayed below.] Project Y requires a $331,500 investment for new machinery with a five-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1. and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation). Depreciation Machinery Selling, general, and administrative expenses Income Years 1-5 4. Determine Project Y's net present value using 9% as the discount rate. Note: Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar. Net present value Not Cash Flows Project Y $ 400,000 Present Value of Annuity at 9% 179,200 66,300 29,000 $ 125,500 Present Value of Net Cash Flows
Project A requires a $315,000 initial investment for new machinery with a five-year life and a salvage value of $35,500. Project A is expected to yield annual income of $23,900 per year and net cash flow of $78,750 per year for the next five years.Compute Project A’s accounting rate of return. *please help correct the answer
Project Y requires a $345,000 investment for new machinery with a six-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project Y $ 355,000 Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses 159,040 57,500 25,000 $ 113,460 Income Required: 1. Compute Project Y's annual net cash flows. Annual amounts Income Cash Flow Sales of new product 355,000 Expenses Materials, labor, and overhead (except depreciation) 159,040 Depreciation-Machinery 57,500 Selling, general, and administrative expenses 25,000 Income $ 113,460 Net cash flow 2$ %24
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:
NPV and EVA A project cost $3.2 million up front and will generate cash flows in perpetuity of $270,000. The firm's cost of capital is 8%. a. Calculate the project's NPV. b. Calculate the annual EVA in a typical year. c. Calculate the overall project EVA. a. The project's NPV is $. (Round to the nearest dollar.) ibra culat ource Enter your answer in the answer box and then click Check Answer. Check Ans udy Clear All 2 parts remaining Lation Tools> pe here to search
Current Attempt in Progress Blossom Company is considering three capital expenditure projects. Relevant data for the projects are as follows. Annual Life of Project Investment Income Project 22A $240,400 $16,700 6 years 23A 273,200 20,740 9 years 24A 281,300 15,700 7 years Annual net income is constant over the life of the project. Each project is expected to have zero salvage value at the end of the project. Blossom Company uses the straight-line method of depreciation. Click here to view PV table. (a) Determine the internal rate of return for each project. (Round answers O decimal places, e.g. 13%. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Project 22A 23A 24A Internal Rate of Return % do % %
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) -$425,000 44,000 62,000 79,000 540,000 -$40,000 20,400 13,300 18,600 15,400 2 4 The required return on these investments is 10 percent. a. What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. What is the IRR for each project? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) d. What is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) e. Based on your answers in (a) through (d), which project will you finally choose? a. Project A Project B b. Project A Project B c. Project A years years % Project B % d. Project A…
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
Tiberius Manufacturing is considering two alternative investment proposals with the following data: Proposal X Investment $10,800,000 Useful life. Estimated annual net cash inflows for 5 years 5 years $2,160,000 Residual value $60,000 Depreciation method Straight-line Required rate of return 14% Calculate the accounting rate of return for Proposal Y. (Round any intermediate calculations and your final answer to two decimal places.) OA. 13.90% OB. 11.56% OC. 17.83% OD. 7.58% Proposal Y $440,000 5 years $99,000 $35,000 Straight-line 13%
(IRR calculation) Determine the IRR on the following projects: a. An initial outlay of $13,000 resulting in a single free cash flow of $17,207 after 7 years b. An initial outlay of $13,000 resulting in a single free cash flow of $47,031 after 14 years c. An initial outlay of $13,000 resulting in a single free cash flow of $110,851 after 23 years d. An initial outlay of $13,000 resulting in a single free cash flow of $13,624 after 4 years a. What is the IRR of a project with an initial outlay of $13,000 resulting in a single free cash flow of $17,207 after 7 years? % (Round to two decimal places.)
3. Becktell Industries has an offer to build a special product for the state highway patrol. The contract will cover a period of 10 years. The projected cash flows associated with the contract are given below: Required: Complete an analysis to calculate the net present value of the above cash flows. Company Required Rate of Return 11% Cost of new equipment 325,000 Working Capital needed 150,000 Net annual cash receipts 80,000 Salvage Value at end 75,000
! Required information [The following information applies to the questions displayed below.] Project Y requires a $331,500 investment for new machinery with a five-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1, EV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Project Y $ 400,000 179,200 66,300 29,000 $ 125,500 3. Compute Project Y's accounting rate of return. Project Y Accounting Rate of Return Denominator: Numerator: / Accounting Rate of Return 0

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