Periods 1%Period 1Period 2Period 3Period 4Period 5Period 6Period 7Period 8Period 9Period 10Period 11Period 12Period 13Period 14Period 15Period 16Period 17Period 18Period 19Period 20Present Value of Ordinary Annuity of $10.990 0.9802% 3%0.9711.9134%0.9621.8863.902 3.808 3.717 3.630 3.546 3.465 3.3874.853 4.713 4.580 4.452 4.329 4.212 4.1006.728 6.4725% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20%0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.8331.970 1.9421.859 1.833 1.808 1.783 1.759 1.736 1.690 1.647 1.626 1.605 1.566 1.5282.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.402 2.322 2.283 2.246 2.174 2.1063.312 3.240 3.170 3.037 2.914 2.855 2.798 2.690 2.5893.993 3.890 3.791 3.605 3.433 3.352 3.274 3.127 2.9915.795 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.111 3.889 3.784 3.685 3.498 3.3266.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 4.160 4.039 3.812 3.6057.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 4.487 4.344 4.078 3.8378.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.328 4.946 4.772 4.607 4.303 4.0319.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.650 5.216 5.019 4.833 4.494 4.19210.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 5.938 5.453 5.234 5.029 4.656 4.32711.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.194 5.660 5.421 5.197 4.793 4.43912.134 11.348 10.635 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.424 5.842 5.583 5.342 4.910 4.53313.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.628 6.002 5.724 5.468 5.008 4.61113.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.061 7.606 6.811 6.142 5.847 5.575 5.092 4.6758.851 8.313 7.824 6.974 6.265 5.954 5.669 5.162 4.7309.122 8.544 8.022 7.120 6.373 6.047 5.749 5.222 4.7759.372 8.756 8.201 7.250 6.467 6.128 5.818 5.273 4.8129.604 8.950 8.365 7.366 6.550 6.198 5.8779.818 9.129 8.514 7.469 6.623 6.259 5.9295.316 4.8445.353 4.8707.562 6.687 6.312 5.973 5.3844.8917.645 6.743 6.359 6.011 5.410 4.9097.718 6.792 6.399 6.044 5.432 4.9257.784 6.835 6.434 6.073 5.451 4.937Period 21Period 22Period 23Period 2410.838 10.106 9.44711.274 10.477 9.76311.690 10.828 10.05913.134 12.085 11.158 10.33612.462 11.470 10.59418.857 17.011 15.415 14.029 12.821 11.764 10.836 10.017 9.292 8.64919.660 17.658 15.937 14.451 13.163 12.042 11.061 10.201 9.442 8.77220.456 18.292 | 16.444 14.857 13.489 12.303 11.272 10.371 9.580 8.88321.243 18.914 | 16.936 | 15.247 | 13.799 12.550 11.469 | 10.529 | 9.707 | 8.98514.718 13.578 12.561 11.65215.562 14.292 13.166 12.16616.398 14.992 13.754 12.65917.226 15.678 14.32418.046 16.351 14.877 13.590 Use the NPV method to determine whether Kyler Products should invest in the following projects:Project A: Costs $280,000 and offers seven annual net cash inflows of $52,000. Kyler Products requires an annual return of 12% on investments of this nature.Project B: Costs $385,000 and offers 9 annual net cash inflows of $75,000. Kyler Products demands an annual return of 10% on investments of this nature.(Click the icon to view Present Value of $1 table.)(Click the icon to view Present Value of Ordinary Annuity of $1 table.)Read the requirements.Requirement 1. What is the NPV of each project? Assume neither project has a residual value. Round to two decimal places. (Enter any factor amounts to three decimal places, X.XXX. Useparentheses or a minus sign for a negative net present value.)Caclulate the NPV (net present value) of each project. Begin by calculating the NPV of Project A.Project A:Years1-70Present value of annuityInvestmentNet present value of Project ACalculate the NPV of Project B.0Project B:Years1-9 Present value of annuityInvestmentNet present value of Project BNet CashInflowNet CashInflowAnnuity PV Factor(i=12%, n=7)Annuity PV Factor(i=10%, n=9)PresentValuePresentValue

NPV = Cash flow / (1 + i)^t – initial investment Net Present value = Present value (PV) of a…

Requirement 1. What is the NPV of each project? Assume neither project has a residual value. Round to two decimal places. (Enter any factor amounts to three decimal place parentheses or a minus sign for a negative net present value.) Caclulate the NPV (net present value) of each project. Begin by calculating the NPV of Project A. Project A: Years 1-7 Present value of annuity 0 Investment Net present value of Project A Calculate the NPV of Project B. Project B: Years 1-9 0 Present value of annuity Investment Net present value of Project B Net Cash Inflow Net Cash Inflow Annuity PV Factor (i=12%, n=7) Annuity PV Factor (i=10%, n=9) Present Value Present Value

Requirement 1. What is the NPV of each project? Assume neither project has a residual value. Round to two decimal places. (Enter any factor amounts to three decimal place parentheses or a minus sign for a negative net present value.) Caclulate the NPV (net present value) of each project. Begin by calculating the NPV of Project A. Project A: Years 1-7 Present value of annuity 0 Investment Net present value of Project A Calculate the NPV of Project B. Project B: Years 1-9 0 Present value of annuity Investment Net present value of Project B Net Cash Inflow Net Cash Inflow Annuity PV Factor (i=12%, n=7) Annuity PV Factor (i=10%, n=9) Present Value Present Value

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 9P

See similar textbooks

Similar questions

Jasmine Manufacturing is considering a project that will require an initial investment of $52,000 and is expected to generate future cash flows of $10,000 for years 1 through 3, $8,000 for years 4 and 5, and $2,000 for years 6 through 10. What is the payback period for this project?
There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows: If the discount rate is 12%, compute the NPV of each project.
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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)?
Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated revenue producing lite of 4 years. Mason has a required rate of return that is 12% and a cost of capital of 11%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?
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