Required information [The following information applies to the questions displayed below.] The following capital expenditure projects have been proposed for management's consideration at Scott Inc. for the upcoming budget year: Use Table 6-4 and Table 6-5. (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.) Project Year(s) $(50,000) 5,000 10,000 15,000 20,000 25,000 Initial investment Amount of net cash return $(25,000) 5,000 5,000 5,000 5,000 5,000 5,000 _$ 1,881 $(50,000) 16,000 $(100,000) 30,000 30,000 15,000 15,000 15,000 15,000 2,942 $(25,000) 1. 16,000 16,000 16,000 16,000 3 10,000 10,000 10,000 6,000 4 5 Per year 6-10 NPV (14% discount rate) Present value ratio 1.04 Required: a. Calculate the net present value of projects B, C, and D, using 14% as the cost of capital for Scott Inc. (Negative amounts should be indicated by a minus sign.) Net Present Value Project B D
Required information [The following information applies to the questions displayed below.] The following capital expenditure projects have been proposed for management's consideration at Scott Inc. for the upcoming budget year: Use Table 6-4 and Table 6-5. (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.) Project Year(s) $(50,000) 5,000 10,000 15,000 20,000 25,000 Initial investment Amount of net cash return $(25,000) 5,000 5,000 5,000 5,000 5,000 5,000 _$ 1,881 $(50,000) 16,000 $(100,000) 30,000 30,000 15,000 15,000 15,000 15,000 2,942 $(25,000) 1. 16,000 16,000 16,000 16,000 3 10,000 10,000 10,000 6,000 4 5 Per year 6-10 NPV (14% discount rate) Present value ratio 1.04 Required: a. Calculate the net present value of projects B, C, and D, using 14% as the cost of capital for Scott Inc. (Negative amounts should be indicated by a minus sign.) Net Present Value Project B D
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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Transcribed Image Text:**Table 6.4: Factors for Calculating the Present Value of $1**
This table provides factors used to calculate the present value of a single dollar across varying numbers of periods and discount rates. The rows represent the number of periods, ranging from 1 to 50. The columns indicate different discount rates, from 2% to 20%.
**Columns:**
- **No. of Periods:** This column lists the number of periods, from 1 to 50.
- **Discount Rates (2% to 20%):** For each period, you have a factor corresponding to eight different annual discount rates: 2%, 4%, 6%, 8%, 10%, 12%, 14%, 16%, 18%, and 20%.
**How to Use the Table:**
To find the present value of $1 for a certain number of periods and a specific discount rate, locate the corresponding row for the number of periods and the column under the desired discount rate. The intersection of this row and column gives the present value factor.
**Example:**
- If you are looking to find the present value of $1 for 10 periods at a 10% discount rate, locate row 10 and column "10%." The factor is 0.386, meaning $1 received in 10 years is worth approximately $0.386 today, at a 10% discount rate.
![**Required Information**
[The following information applies to the questions displayed below.]
The following capital expenditure projects have been proposed for management’s consideration at Scott Inc. for the upcoming budget year: Use Table 6-4 and Table 6-5. (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.)
| Year(s) | Project | | | |
|----------------|---------|---------|--------|--------|
| | A | B | C | D |
| Initial investment | $(25,000) | $(25,000) | $(50,000) | $(50,000) |
| Amount of net cash return | | | | |
| 1 | 5,000 | 0 | 16,000 | 5,000 |
| 2 | 5,000 | 0 | 16,000 | 10,000 |
| 3 | 5,000 | 0 | 16,000 | 15,000 |
| 4 | 5,000 | 0 | 10,000 | 25,000 |
| 5 | 5,000 | 16,000 | 0 | 0 |
| Per year (6-10) | 5,000 | 6,000 | 0 | 0 |
| NPV (14% discount rate) | $1,081 | | | |
| Present value ratio | 1.04 | | | |
**Required:**
a. Calculate the net present value of projects B, C, and D, using 14% as the cost of capital for Scott Inc. (Negative amounts should be indicated by a minus sign.)
| Project | Net Present Value |
|---------|--------------------|
| B | |
| C | |
| D | |](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F354988b1-49b5-4361-999f-1aaef20d6b01%2Ff96623ba-b831-42c3-880c-0cbce17cf700%2Fgpkgbq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Required Information**
[The following information applies to the questions displayed below.]
The following capital expenditure projects have been proposed for management’s consideration at Scott Inc. for the upcoming budget year: Use Table 6-4 and Table 6-5. (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.)
| Year(s) | Project | | | |
|----------------|---------|---------|--------|--------|
| | A | B | C | D |
| Initial investment | $(25,000) | $(25,000) | $(50,000) | $(50,000) |
| Amount of net cash return | | | | |
| 1 | 5,000 | 0 | 16,000 | 5,000 |
| 2 | 5,000 | 0 | 16,000 | 10,000 |
| 3 | 5,000 | 0 | 16,000 | 15,000 |
| 4 | 5,000 | 0 | 10,000 | 25,000 |
| 5 | 5,000 | 16,000 | 0 | 0 |
| Per year (6-10) | 5,000 | 6,000 | 0 | 0 |
| NPV (14% discount rate) | $1,081 | | | |
| Present value ratio | 1.04 | | | |
**Required:**
a. Calculate the net present value of projects B, C, and D, using 14% as the cost of capital for Scott Inc. (Negative amounts should be indicated by a minus sign.)
| Project | Net Present Value |
|---------|--------------------|
| B | |
| C | |
| D | |
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