6, Sungsam Electronics has to choose between two investment options Eachalternative involves an initial outlay of $100,000. Their cash flows follow:YearA$10,00020,00030,00040,00050,000B$50,00040,00030,000134Evaluate and rank each alternative based ona) payback periodb) net present value (use a 10% discount rate)c) internal rate of return. (Hint: Use Cash flows in Calculator for Parts b & c)

Initial Investment = 100,000 Cash Flows: Year Cash Flow - A Cash Flow - B 0 -100,000 -100,000…

Sungsam Electronics has to choose between two investment options Each alternative involves an initial outlay of $100,000. Their cash flows follow: Year A $10,000 20,000 30,000 40,000 50,000 B $50,000 40,000 30,000 1 Evaluate and rank each alternative based on a) payback period b) net present value (use a 10% discount rate)

Sungsam Electronics has to choose between two investment options Each alternative involves an initial outlay of $100,000. Their cash flows follow: Year A $10,000 20,000 30,000 40,000 50,000 B $50,000 40,000 30,000 1 Evaluate and rank each alternative based on a) payback period b) net present value (use a 10% discount rate)

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 13E: Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a...

See similar textbooks

Similar questions

Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a net cash inflow one year from now of 810,000. Assume the cost of capital is 10 percent. Required: 1. Break the 810,000 future cash inflow into three components: a. The return of the original investment b. The cost of capital c. The profit earned on the investment 2. Now, compute the present value of the profit earned on the investment. 3. Compute the NPV of the investment. Compare this with the present value of the profit computed in Requirement 2. What does this tell you about the meaning of NPV?
Find the profitability index for Oman Air conditioner Company if the initial investment is 4000 OMR and the cash Inflows are as follows: Year 1 =1350 OMR; Year 2 =1400 OMR; Year 3=1450 OMR and Year 4=1500 OMR. Use discount rate as 5%. Select one: a. 1.69 b. 1.48 c. 1.26 d. 1.83 e. None of the options Find the Net Present Value (NPV) for Oman Computer company if the initial investment is 5000 OMR and the cash Inflows are as follows: Year 1 =1250 OMR; Year 2 =1500 OMR; Year 3=1750 OMR and Year 4=2000 OMR. Use discount rate as 3%. Select one: a. 1005.94 OMR b. 1574.27 OMR c. 2344.92 OMR d. None of the options e. 2070.76 OMR
Find the Net Present Value (NPV) for Oman Computer company if the initial investment is 15000 OMR and the cash Inflows are as follows: Year 1 =2509 OMR; Year 2 =5590 OMR; Year 3=7500 OMR and Year 4=9200 OMR. Use discount rate as 2.02%. Select one: O a. None of the options O b. 8936.11 OMR O c. 8574.51 OMR O d. 82344.41 OMR O e. 8386.11 OMR
Find the Net Present Value (NPV) for Muscat Packaging Company if the initial investment is 20000 OMR and the cash Inflows are as follows: Year 1 =12500 OMR; Year 2 =13500 OMR; Year 3=14500 OMR and Year 4=15500 OMR. Use discount rate as 4.05%.Select one:a. None of the optionsb. 24074.75 OMRc. 33074.34 OMRd. 12074.50 OMRe. 30578.84 OMR If the stock is 1100 and debtors are 0.543 from receivables and receivables are 3200, equity 300 account payable 3000, the cash is 100, then the gross working capital is Select one: a. All the given choices are not correct b. 6137.60 c. 6437.60 d. 9437.60 e. 9137.60
Find the Net Present Value (NPV) for Muscat Packaging Company if the initial investment is 20000 OMR and the cash Inflows are as follows: Year 1 =12500 OMR; Year 2 =13500 OMR; Year 3=14500 OMR and Year 4=15500 OMR. Use discount rate as 4.05%. Select one: O a. 24074.75 OMR O b. 33074.34 OMR c. 30578.84 OMR O d. 12074.50 OMR O e. None of the options
Find the profitability index for Oman Air conditioner Company if the initial investment is 4000 OMR and the cash Inflows are as follows: Year 1 =1350 OMR; Year 2 =1400 OMR; Year 3=1450 OMR and Year 4=1500 OMR. Use discount rate as 5%. Select one: a. 1.48 b. 1.26 c. None of the options d. 1.83 e. 1.69
ARCABE Enterprises is trying to select the best investment from among four alternatives. Each alternative involves an initial outlay of P100,000. Their cash flows follow(see image) Evaluate and rank each alternative based on: a) discounted payback period (use a 10% for cost of capital) b) net present value (use a 10% discount rate) c) internal rate of return.
Find the profitability index for Oman Air conditioner Company if the initial investment is 4000 OMR and the cash Inflows are as follows: Year 1 =1350 OMR; Year 2 =1400 OMR; Year 3=1450 OMR and Year 4=1500 OMR. Use discount rate as 5%. Select one: O a. 1.48 O b. None of the options O c. 1.69 O d. 1.83 Oe. 1.26
Find the Net Present Value (NPV) for Oman Car Company if the initial investment is 8000 OMR and the cash Inflows are as follows: Year 1 =2000 OMR; Year 2 =2500 OMR; Year 3=2800 OMR and Year 4=3000 OMR. Use discount rate as 4.004%. Select one: a. None of the options b. 1407.54 OMR c. 1287.12 OMR d. 2174.15 OMR e. 1307.40 OMR
Wells Inc., has identified an investment project with the following cash flows. Year Cash flow 1 $970 2 $1200 3 $1420 4 $2160 a.) If the discount rate is 7 percent, what is the future value of these cash flows in year 4? a.) Future value at 7 percent_____ b.) What is the future value at an interest rate of 13 percent? b.) Future value at 13 percent_____ c.) What is the future value at an interst rate of 22 percent? c.) Future value at 22 percent_____
You are considering an investment project with the cash flows of -300 (the initial cash flow), 700 (cash flow at year 1), -200 (cash flow at year 2). Given the discount rate of 10%, compute the Modified Internal Rate of Return (MIRR) using the discounting approach. 50.44% 10.72% O 28.64% O 37.84%
Find the Net Present Value (NPV) for Muscat Packaging Company if the initial investment is 20000 OMR and the cash Inflows are as follows: Year 1=12500 OMR; Year 2 =13500 OMR; Year 3=14500 OMR and Year 4=15500 OMR. Use discount rate as 4.05%.