The management of Nebraska Corporation is considering the purchase of a new machine costing $490,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information use the following data in determining the acceptability: Operating Net Cash Year Income Flow 1 $100,000 $180,000 2 40,000 120,000 3 40,000 100,000 4 10,000 90,000 10,000 120,000 The average rate of return for this investment is Oa. 10% Оь. 18% Oc. 16% Od. 58%

The management of Nebraska Corporation is considering the purchase of a new machine costing $490,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information use the following data in determining the acceptability: Operating Net Cash Year Income Flow 1 $100,000 $180,000 2 40,000 120,000 3 40,000 100,000 4 10,000 90,000 10,000 120,000 The average rate of return for this investment is Oa. 10% Оь. 18% Oc. 16% Od. 58%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Brans Co. is considering a $270,000 investment, which will provide net returns of $110,000, $140,000, and $220,000 in the second, third, and fourth yearS, respectively. The company has a payback rule of 3 years. Should the company undertake the investment? Use the following table: Cumulative Cash Flow Cash Cash Net Cash Year Outflow Inflow Flow a. No O b. Yes
Doak Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 -$32,600 1 11,520 2 14,670 3 11,270 4 10,940 5 -4,230 The company uses an interest rate of 10 percent on all of its projects. Calculate the MIRR of the project using all three methods. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Discounting approach % Reinvestment approach % Combination approach %
Beyer Company is considering the purchase of an asset for $320,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Year 1 Year 2 Year 3 Year 4 Year 5 Total Net cash flows $ 76,000 $ 44,000 $ 70,000 $ 250,000 $ 17,000 $ 457,000 Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal place.)
Perez Company is considering an investment of $26,945 that provides net cash flows of $8,500 annually for four years.(a) What is the internal rate of return of this investment? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your present value factor to 4 decimals.)(b) The hurdle rate is 7%. Should the company invest in this project on the basis of internal rate of return?
Cardinal Company is considering a five-year project that would require a $2,975,000 investment in equipment with a useful life of five years and no salvage value. The company’s discount rate is 14%. The project would provide net operating income in each of five years as follows: Required: (Answer each question by referring 10 the original data unless instructed otherwise.) 1. Which item(s) in the income statement shown above will not affect cash flows? 2. What are the project’s annual net cash inflows? 3. What is the present value of the project’s annual net cash inflows? 4. What is the project’s net present value? 5. What is the project profitability index for this project? (Round your answer to the nearest whole percent.) 6. What is the project’s internal rate of return to the nearest whole percent? 7. What is the project’s payback period? 8. What is the project’s simple rate of return for each of the five years? 9. If the company’s discount rate was 16% instead of 14%, would you…
A company is expecting annual cash flows of $10,000 in years 6 to 10; $20,000 annually in years 11 to 20; and $40,000 in years 21 to 30. Given a nominal rate of 4.25% compounded semi-annually, determine the net present value of the cash flows. When entering your answer, round your values to the nearest dollar, and use a $ symbol, as well as the correct comma separator. For example $234,567 Answer: A company is expecting annual cash flows of $10,000 in years 6 to 10; $20,000 annually in years 11 to 20; and $40,000 in years 21 to 30. Given a nominal rate of 4.25% compounded semi-annually, determine the net future value of the cash flows. When entering your answer, round your values to the nearest dollar, and use a $ symbol, as well as the correct comma separator. For example $234,567 Answer:
Beyer Company is considering the purchase of an asset for $230,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Year 1 Year 2 Year 3 Year 4 Year 5 Total Net cash flows $ 53,000 $ 35,000 $ 64,000 $ 150,000 $ 26,000 $ 328,000
Hi expert please answer it same as required to put in the boxes making same tables.
Beyer Company is considering the purchase of an asset for $240,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Net cash flows Year 0 1 2 3 4 5 Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal place.) $ Cash Inflow (Outflow) (240,000) Year 1 $60,000 Payback period = Year 2 $36,000 Cumulative Net Cash Inflow (Outflow) Year 3 $60,000
Based on Exhibit I prepare a discounted cash flow analysis (NPV) of this venture. Assume the different customer levels in Exhibit I represents the average monthly customer base for each year – expected monthly customer base for year one is 187 customers per month. By year four the expected customer base is 328 per month. Also assume the listed expenses are a reasonable estimates as far as they go; are there any other expenses that should be considered? Assume a 35% tax rate, annual depreciation and amortization of $22,583, no change in non-cash working capital or long term assets over the next four years, a cost of equity capital of 20%, SBA loan at 6.5%, a $333,000 total investment with $80,000 in equity and a $253,000 SBA backed loan, and the terminal value based an after-tax operating profit valuation multiple of 6. To calculate the terminal value apply the valuation multiple to the projected cash flow in year four and add this value to the projected cash flow for year four. Does…
Roosevelt Communication is trying to estimate the Year 1 operating cash flow for a proposed project. The assets required for the project were fully depreciated at the time of purchase. The financial staff has collected the following information: Sales revenues $13.3 million Operating Costs 8.4 million Interest Expense 1.3 million Roosevelt has also determined that this project would cannabalize one of its other projecrs by $1.6 million of cash flow (before taxes) per year. The firm has a 25 percent tax rate, and its WACC is 8 percent. Calculate the project's operating cash flow for Year 1. Answers: a. $ -25,000 b. $2,475,000 c. $1,500,000 d. $2,700,000 e. $3,675,000
Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow 0 −$ 15,200 1 6,300 2 7,500 3 7,100 4 5,900 5 −3,300 The company uses an interest rate of 12 percent on all of its projects. Calculate the MIRR of the project using all three methods. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.