### Required InformationThe 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 Details| Year(s) | Project | | | | | ||---------------------|---------------|-----------|-----------|-----------|-----------|-----------|| | | A | B | C | D | E || Initial investment | 0 | $(25,000) | $(25,000) | $(50,000) | $(50,000) | $(100,000)|| Amount of net cash return | | | | | | || | 1 | 5,000 | 0 | 16,000 | 5,000 | 30,000 || | 2 | 5,000 | 0 | 16,000 | 5,000 | 15,000 || | 3 | 5,000 | 10,000 | 16,000 | 15,000 | 15,000 || | 4 | 5,000 | 10,000 | 16,000 | 15,000 | 15,000 || | 5 | 5,000 | 10,000 | 16,000 | 25,000 | 15,000 || Per year | 6-10 | | 6,000 | 16,000 | | 15,000 || NPV (14% discount rate) | | $1,081 | ? | ? | ? | $2,942 || Present value ratio | | 1.04 | ? | ? | ? | ? |---#### Instructionsb. Calculate the present value ratio for projects B, C, D, and E. (Round your answers to 2 decimal places.)| Project | Present Value Ratio ||--------- **Present Value Tables for Financial Calculations**### Table 6.5: Factors for Calculating the Present Value of an Annuity of $1This table provides the present value factors for an annuity of $1 over different periods and discount rates. It is crucial for financial planning, investment analysis, and other economic evaluations where future annuity payments need to be assessed in today's value. - **Columns:** The columns represent various discount rates ranging from 2% to 20%.- **Rows:** The rows indicate the number of periods over which the annuity is calculated, ranging from 1 to 50.- **Values:** Each cell contains the factor used to compute the present value of an annuity. Multiply this factor by the annuity payment to get its present value.### Table 6.4: Factors for Calculating the Present Value of $1This table assists in determining the present value of a single dollar amount to be received in the future based on varying interest rates and time periods, which is essential for discounting future cash flows.- **Columns:** Similar to Table 6.5, the columns offer various discount rates from 2% to 20%.- **Rows:** The rows reflect the number of periods for which the present value is calculated, from 1 to 50.- **Values:** Each cell shows the factor to calculate the present value of a single amount of money. Multiply this factor by the future amount to derive its present value.**Graphical Explanation**Both tables are laid out in a matrix format with the number of periods on the left and discount rates across the top. Users can locate their desired discount rate and period to find the corresponding present value factor. These tables are essential tools in finance for understanding how money's value changes over time based on interest rates.

Present value refers to the current valuation for a future sum. Investors determine the present value of an underlying asset or security to ascertain the value required in the present time for the expected future sum. The computation of the present value for a future sum requires the future amount, the interest rate or the discount rate, the number of years, and the number of compounding periods in a year. The present value for a future sum can be determined either by using the formula for the same or by using the Excel PV function. The present value ratios are calculated by the addition of initial investment and net present value and the resulting present value of inflows needs to be divided by the present value of outflows i.e., the initial investment. Net present value (NPV) is used to determine the present value of all future cash flows. Net present value can be referred to as the difference of all cash outflows and inflows discounted to present value. Net present value can be determined by using the formula for the same or by using the excel NPV function. In order to compute NPV, initial cash outflow is required, cash inflow for a specified period, and the discount rate.Calculation of NPV and Present Value Ratio is as follows: Excel working: Computation:The NPV for project B is $3,562.41. The NPV for project C is $4,929.30. The NPV for project D is -$2,968.96. The NPV for project E is $2,941.64. The present value ratio for project B is 1.14. The present value ratio for project C is 1.10. The present value ratio for project D is 0.94. The present value ratio for project E is 1.03.

Business

Finance

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) B D E $ (50,000) 16,000 16,000 16,000 16,000 16,000 $ (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 $ 1,081 $(25,000) $(100,000) 30,000 2 30,000 15,000 15,000 3 10,000 10,000 4 10,000 6,000 15,000 15,000 Per year NPV (14% discount rate) 6-10 2,942 Present value ratio 1.04 b. Calculate the present value ratio for projects B, C, D, and E. (Round your answers to 2 decimal places.)

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) B D E $ (50,000) 16,000 16,000 16,000 16,000 16,000 $ (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 $ 1,081 $(25,000) $(100,000) 30,000 2 30,000 15,000 15,000 3 10,000 10,000 4 10,000 6,000 15,000 15,000 Per year NPV (14% discount rate) 6-10 2,942 Present value ratio 1.04 b. Calculate the present value ratio for projects B, C, D, and E. (Round your answers to 2 decimal places.)

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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Capital Budgeting Assume you are evaluating two mutually exclusive projects, the cash flows of which appear below and that your company uses a cost of capital of 12% to evaluate projects such as these. Time Project A Cash Flows Project B Cash Flows 0 -$300,000 -$405,000 1 -387,000 134,000 2 -193,000 134,000 3 -100,000 134,000 4 600,000 134,000 5 600,000 134,000 6 850,000 134,000 7 -180,000 0 Determine the crossover point for these projects’ NPV profiles.
A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows: 0 1 2 3 4 5 Project M Project N -$12,000 $4,000 $4,000 $4,000 $4,000 $4,000 -$36,000 $11,200 $11,200 $11,200 $11,200 $11,200
Capital Budgeting Assume you are evaluating two mutually exclusive projects, the cash flows of which appear below and that your company uses a cost of capital of 13% to evaluate projects such as these. Time Project A Cash Flows Project B Cash Flows 0 -$46,800 -$63,600 1 -21,600 20,400 2 43,200 20,400 3 43,200 20,400 4 43,200 20,400 5 -28,800 20,400 Assuming a cost of capital of 13%, which of these projects should be accepted?
If it can be done in excel, please, I would appreciate it very much (and show the formulas). For the purposes of the cash budget, projected balance method, it is necessary to calculate the depreciation for the year and for this purpose we have the following data: The balance of the Delivery Equipment account is $250,000.00; the Accumulated Depreciation of Delivery Equipment is $100,000.00; the depreciation method is straight-line; the company has been operating for two years. What is the amount of depreciation to be charged to income in the current fiscal year?
11) The Department of Public Works has $1.1 million to allocate amongst several public projects. Data on these projects are presented in the following table: Annual benefit, Project First cost, $K $K/year Life, years 400 100 10 B 300 100 25 250 80 15 500 70 40 350 90 10 200 60 20 Using a MARR of 15%, rank the projects by their BCR, and comment on the most efficient way to allocate $1.1 million.
Capital Budgeting Assume you are evaluating two mutually exclusive projects, the cash flows of which appear below and that your company uses a cost of capital of 13% to evaluate projects such as these. Time Project A Cash Flows Project B Cash Flows 0 -$46,800 -$63,600 1 -21,600 20,400 2 43,200 20,400 3 43,200 20,400 4 43,200 20,400 5 -28,800 20,400 Calculate the payback period and discounted payback period for projects A & B.
Halls Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $5,000,000 for the year. Laura Bentley, staff analyst at Halls, is preparing an analysis of the three projects under consideration by Caden Halls, the company's owner. Data Table A B C D 1 Project A Project B Project C 2 Projected cash outflow 3 Net initial investment $3,000,000 $2,100,000 $3,000,000 4 Projected cash inflows 5 Year 1 $1,200,000 $1,200,000 $1,700,000 6 Year 2 1,200,000 600,000 1,700,000 7 Year 3 1,200,000 500,000 200,000 8 Year 4 1,200,000 100,000 9 Required rate of return 6% 6% 6 1.. Calculate the payback period for each of the three projects. Ignore income taxes. Using the payback method, which projects should Halls choose?. Ignore income taxes. (Round your answers to…
Stockinger Corporation has provided the following information concerning a capital budgeting project: Investment required in equipment $ 296,000 Expected life of the project 4 Salvage value of equipment $ 0 Annual sales $ 620,000 Annual cash operating expenses $ 444,000 Working capital requirement $ 30,000 One-time renovation expense in year 3 $ 88,000 The company’s income tax rate is 30% and its after-tax discount rate is 11%. The working capital would be required immediately and would be released for use elsewhere at the end of the project. The company uses straight-line depreciation on all equipment. Assume cash flows occur at the end of the year except for the initial investments. The company takes income taxes into account in its capital budgeting. The total cash flow net of income taxes in year 3 is:
Capital Budgeting Assume you are evaluating two mutually exclusive projects, the cash flows of which appear below and that your company uses a cost of capital of 12% to evaluate projects such as these. Time Project A Cash Flows Project B Cash Flows 0 -$300,000 -$405,000 1 -387,000 134,000 2 -193,000 134,000 3 -100,000 134,000 4 600,000 134,000 5 600,000 134,000 6 850,000 134,000 7 -180,000 0 Sketch the NPV profile for projects A & B.
Capital Budgeting Assume you are evaluating two mutually exclusive projects, the cash flows of which appear below and that your company uses a cost of capital of 12% to evaluate projects such as these. Time Project A Cash Flows Project B Cash Flows 0 -$300,000 -$405,000 1 -387,000 134,000 2 -193,000 134,000 3 -100,000 134,000 4 600,000 134,000 5 600,000 134,000 6 850,000 134,000 7 -180,000 0 Under what conditions on the cost of capital should project B be preferred to project A?
5
A firm with a 13% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows: 0 1 + 2 + -Select- % Project M -$6,000 $2,000 $2,000 $2,000 $2,000 $2,000 Project N -$18,000 $5,600 $5,600 $5,600 $5,600 $5,600 a. Calculate NPV for each project. Do not round intermediate calculations. Round your answers to the nearest cent. Project M: $ Project N: $ Calculate IRR for each project. Do not round intermediate calculations. Round your answers to two decimal places. Project M: Project N: Calculate MIRR for each project. Do not round intermediate calculations. Round your answers to two decimal places. Project M: Project N: Calculate payback for each project. Do not round intermediate calculations. Round your answers to two decimal places. Project M: Project N: years Calculate discounted payback for each project. Do not round intermediate calculations. Round your answers to two decimal places. Project M: Project N: years b. Assuming…

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