Requirement 1. Compute the payback, the ARR, the NPV, and the profitability index of these two options.Compute the payback for both options. Begin by completing the payback schedule for Option 1 (refurbish).Year01235678Net Cash OutflowsAmount Invested$2,400,000Net Cash InflowsAnnualAccumulated$ 2,150,000 $280,000230,000180,000130,000130,000130,000130,0002,150,0002,430,0002,660,0002,840,0002,970,0003,100,0003,230,0003,360,000(Round your answer to one decimal place.)The payback for Option 1 (refurbish current machine) isyears.

The payback Period represents the period in which the initial cost of investment of a project is…

Answered: Requirement 1. Compute the payback, the…

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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with cashflow diagram
K (Present value of annuities and complex cash flows) You are given three investment alternatives to analy End of Year 1 5678AWN2 3 A $15,000 15,000 15,000 15,000 15,000 Investment B $15,000 15,000 15,000 15,000 C $20,000 60,000 a. What is the present value of investment A at an annual discount rate of 19 percent? (Round to the nearest cent.) BELEID
Consider two investments with the fo llowing sequences of cash flows:Net Cush FlowII Project A Project B0 -$30.000 -$15,000I $2,000 $LO,OOO2 $6,000 $10,0003 $12,000 $10,0004 $24 .000 $10,0005 $28,000 $5.000(a) Compute the r:' for each investment.(b) Plot the present-worth curve for each project on the same chart and find the interest rate that makes the two projects equivalent.(c) Tf A and Bare mutually exclusive investment projects, which project is more economically desirable at MARR of 15%?
Question content area top Part 1 (Related to Checkpoint 6.6) (Present value of annuities and complex cash flows) You are given three investment alternatives to analyze. The cash flows from these three investments are as follows: Investment Alternatives End of Year A B C 1 $ 14,000 $ 14,000 2 14,000 3 14,000 4 14,000 5 14,000 $ 14,000 6 14,000 70,000 7 14,000 8 14,000 9 14,000 10 14,000 14,000 (Click on the icon in order to copy its contents into a spreadsheet.) Assuming an annual discount rate of 15 percent, find the present value of each investment. Question content area bottom Part 1 a. What is the present value of investment A at an annual discount rate of 15 percent?…
1.4 The table represents the cash flows received from the investments at the end year. Each investment requires an initial investment of $1000. Answer the questions related to the two investment opportunities in the table below. Year 1 2 3 4 5 Investment A 225 215 250 225 205 Investment B 220 225 250 250 210 There are two approaches to evaluate this investment. Show the necessary calculations. • Assume the interest rate ot 4.33%. Use present value analysis to determine which investment you should choose? Calculating the rate of returns of the investment, which investment would you choose and why?
Solve this question
Find teh present value of the streams of cash flows shown in the following table. Assume that the firms opportunity cost is 14% A: Year Cash Flow 1 -$2100 2 2900 3 4000 4 5900 5 8200 B: Year Cash Flow 1 $9000 2-5 $5000/yr 6 $7200 C: Year Cash Flow 1-5 $12000/yr 6-10 $8000/yr The presevent vaule of stream A, B, and C
What is the present value of an investment with the following cash flows? Year 1 $14,000 Year 2 $20, 000 Year 3 $30,000 Year 4. $ 43,000 Year 5. $ 57,000 Use a 7% discount rate, and round your answer to the nearest $1. a. $128, 487 b. $107, 328 c. $112, 346 d. $ 153, 272
. Year End Cash Flow Alternative A Alternative B 0 -1,000 600 1 600 500 2 600 -2,000 3 600 400 4 600 200 5 -2,100 -1,000 6 700 1,386 a) Solve for the Net Present Value of the alternatives A and B using interest rates from 0% upward b) what are the rate of return of the two alternatives c) If your MARR is 8 percent, which alternatives would you select? Comment briefly on your results. What are some problems associated with the ROR method?
PROBLEM 1-Benefit-Cost Analysis Which is the better alternative given 9% discount rate? Alternative A Alternative B 1000 1000 1000 1000 1000 1750 1750 1750 1750 1750 1 2 1 2 3 3,000 4,500 Equation for Incremental Analysis: Better Alternative: -- PROBLEM 2-Determine the External Rate of Return, i' Discount Rate%3D5% Cashflow PV-Cash Outflow PV-Cash Inflow Year (P27,500) 6,000 8,000 7,000 (4,000) 9,000 5,000 6. 1 2 4 3 4 2 1 %3D %3D
Investment Opportunity Cash Flows in $ 1 3 1,100 $ (500) $ Suppose you are presented with the investment opportunity described in the table above Assume the applicable annual interest rate is 4.75% Calculate the NPV of this investment. Round your answer to two decimals (Do not include the S-sign in your answer, enter negative values with a minus sign and not in parentheses) Year Benefits Costs 2731.16 0 $ $ 350 $ $ (1,100) $ (1,300) $ 2 500 $ (1,500) $ 4 1,500 $ (400) 5 5,000

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