The following data are given for Encino Aluminium Company: Initial cost of proposed equipment $75,000 Estimated useful life 7 years Estimated annual profit $18,000 Predicted residual value at the end of the useful life $3,000 Cost of capital (required rate of return) 12% Compute the internal rate to return (IRR). 13% 15% 17% 11% 19%

The following data are given for Encino Aluminium Company: Initial cost of proposed equipment $75,000 Estimated useful life 7 years Estimated annual profit $18,000 Predicted residual value at the end of the useful life $3,000 Cost of capital (required rate of return) 12% Compute the internal rate to return (IRR). 13% 15% 17% 11% 19%

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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a- At 10%, find PW for the following Table Warehouse cost equipment cost Installation cost Annual maintenance costs Annual Revenues Salvage Machine life 0 1 2 3 -90,000 b- A project with an IRR = 20%, it has the following NCF (S) X X 4000 (SUS) 50,000 46.000 Find X? 6,500 8,000 45,000 15,000 15 years
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please answer in text form and in proper format answer with must explanation , calculation for each part and steps clearly
Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $130,900. Project 2 requires an initial investment of $97,200. Assume the company requires a 10% rate of return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Project 1 Years 1-7 Initial investment Net present value Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Net Cash Flows X Answer is complete but not entirely correct. Present Value of Annuity at 10% 26,460 X Project 1 $ 105,300 X 70,200…
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Database Systems is considering expansion into a new product line. Assets to support expansion will cost $890,000. It is estimated that Database can generate $1,860,000 in annual sales, with an 13 percent profit margin. What would net income and return on assets (investment) be for the year? (Input your return on assets answer as a percent rounded to 2 decimal places.) Net Income Return on assets 96
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