The Sisyphean Company is planning on investing in anew project. This will involve the purchase of some newmachinery costing $ 300,000. The Sisyphean Companyexpects cash inflows from this project as detailedbelow: Year 1: $ 131,579 Year 2: $ 131,579 Year 3: $131,579 Year 4: $ 131,579 The appropriate discountrate for this project is 18%. The internal rate of return (IRR) for this project is closest to: Question content areabottom Part 1 A.27% B.16% C.20% D.31%

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Answered: The Sisyphean Company is planning on…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 6PA: There are two projects under consideration by the Rainbow factory. Each of the projects will require...

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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: Use the information from the previous exercise to calculate the internal rate of return on both projects and make a recommendation on which one to accept. For further instructions on internal rate of return in Excel, see Appendix C.
There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment or $28.000 and is expected to generate the following cash flows: If the discount rate is 5% compute the NPV of each project and make a recommendation of the project to be chosen.
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?
Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the following cash flows over the next five years: $99,000, $88,000, $92,000. $87,000, and $72,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel. see Appendix C.
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)?
The Sisyphean Company is planning on investing in a new project. This will involve the purchase of some new machinery costing $420,000. The Sisyphean Company expects cash inflows from this project as detailed below: Year 1 Year 2 Year 3 Year 4 $200,000 $225,000 $275,000 $200,000 The appropriate discount rate for this project is 16%. What is the NPV of the project? What is the IRR of the project?
The Gamma Company is planning on investing in a new project. This project requires an initial investment into a new machinery of $450,000. The Gamma Company expects cash inflows from this project to be as follows: $200,000 in year 1, $225,000 in year 2, $275,000 in year 3, and $200,000 in year 4 of the project. The appropriate discount rate for this project is estimated at 17% . What is the IRR of this project? 30.9% 21.5% 39.2% 27.4% 34.1% 24.3%
The Sisyphean Company is planning on investing in a new project. This will involve the purchase of some new machinery costing $400,000. The Sisyphean Company expects cash inflows from this project as detailed below: Year 1 $169,377 19% 15% The appropriate discount rate for this project is 17%. The internal rate of return (IRR) for this project is closest to: 25% Year 2 $169,377 Ⓒ29% Year 3 $169,377 Year 4 $169,377
Newland Company is considering investing in one of two projects – A or B. The initial cost and net cash inflows from each project are shown below. The discount rate for both projects is 18% per cent. Cash Flow Project A Project B $ $ Initial Cost 3,000,000 3,500,000 Net Cash Inflows Year 1 800,000 1,000,000 Year 2 800,000 1,000,000 Year 3 1,200,000 700,000 Year 4 1,200,000 800,000 Year 5 1,200,000 800,000 Year Factor 1 0.8475 2 0.7182 3 0.6086 4 0.5158 5 0.4371 Discount factors for the projects @18% per annum are as follows: Required: Calculate the payback period for each project and identify the project in which the company should invest, giving ONE reason for your choice. Calculate the Accounting Rate of Return on initial capital for each project
Vijay
Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow 0 -$ 29,100 1 11,300 2 14,000 3 15,900 4 13,000 5 -9,500 The company uses a discount rate of 12 percent and a reinvestment rate of 7 percent on all of Its projects. Calculate the MIRR of the project using the discounting approach. (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) MIRR % Calculate the MIRR of the project using the reinvestment approach. (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 3216.) MIRR PA Calculate the MIRR of the project using the combination approach. (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal
Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow 0 -$ 29,300 11,500 12345 14,200 16,100 13,200 -9,700 The company uses a discount rate of 11 percent and a reinvestment rate of 8 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR % b. Reinvestment approach MIRR 14.18 % c. Combination approach MIRR 13.68 %

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