QUESTION 5Use the information provided below to answer the following questions. Where applicable, use the present value tablesprovided in APPENDICES 1 and 2 that appear after QUESTION 5.5.15.25.35.45.5Calculate the Payback Period of both machines (expressed in years, months and days.)Which machine should be chosen on the basis of payback period only? Why?Calculate the Accounting Rate of Return (on average investment) of Machine A (expressed to twodecimal places).Calculate the Net Present Value of each machine (amounts expressed to the nearest Rand.)Calculate the Internal Rate of Return of Machine B (expressed to two decimal places) usinginterpolation. INFORMATIONNiterra Limited intends purchasing a new machine and has a choice between the following two machines:Initial costExpected useful lifeScrap valueExpected net profit or net cash flowsYear 1Year 2Year 3Year 4Year 5Machine AR400 0005 years0Net profitR20 000R40 000R50 000R70 000APPENDIX 1: PRESENT VALUE OF R10Machine BR400 0005 years0Net cash flowsR116 000R116 000R116 000R116 000R116 000The company estimates that it's cost of capital is 12%. Depreciation is estimated at R80 000 per year.

Payback period Payback period is the span of time required to recover the original initial…

Use the information provided below to answer the following questions. Where applicable, use the present value provided in APPENDICES 1 and 2 that appear after QUESTION 5. Calculate the Payback Period of both machines (expressed in years, months and days.) 5.1 5.2 5.3 Which machine should be chosen on the basis of payback period only? Why? Calculate the Accounting Rate of Return (on average investment) of Machine A (expressed to two decimal places).

Use the information provided below to answer the following questions. Where applicable, use the present value provided in APPENDICES 1 and 2 that appear after QUESTION 5. Calculate the Payback Period of both machines (expressed in years, months and days.) 5.1 5.2 5.3 Which machine should be chosen on the basis of payback period only? Why? Calculate the Accounting Rate of Return (on average investment) of Machine A (expressed to two 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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For each of the following situations, Identify (1) the case as either (a) a present or a future value and (b) a single amount or an annulty. (2) the table you would use in your computations (but do not solve the problem), and (3) the Interest rate and time periods you would use. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Round "Table Factors" to 4 decimal places. a. You need to accumulate $10,100 for a trip you wish to take in four years. You are able to earn 10% compounded semiannually on your savings. You plan to make only one deposit and let the money accumulate for four years. How would you determine the amount of the one-time deposit? b. Assume the same facts as in part (a) except that you will make semiannual deposits to your savings account. What is the required amount of each semiannual deposit? 1. You want to retire after working 40 years with savings in excess of $1,020,000. You expect to save $4,080 a year for 40…
Assume that at the beginning of the year, you purchase an investment for $2,500 that pays $67 annual income. Also assume that the investment's value has decreased to $2,350 at the end of the year. a. What is the rate of return for this investment? b. Is the rate of return a positive or a negative number? Complete this question by entering your answers in the tabs below. Req 1 Req 2 What is the rate of return for this investment? Note: Enter your answer as a percent rounded to 2 decimal places. Input the amount as a positive value. Rate of return % Req 1 Req 2 >
Can I get some help with this practice question
Determine the future value of the following single amounts. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) 1. 2. 3. 4. Invested Amount 15,500 23,000 35,000 56,000 $ 67 67 $ $ $ i = 5% 5% 11% 6% n = 12 6 18 14 Future Value
Consider two assets with the following cash flow streams: Asset A generates $4 at t=1, $3 at t=2, and $10 at t=3. Asset B generates $2 at t=1, $X at t=2, and $10 at t=3. Suppose X=6 and the interest rate r is constant. For r=0.1, calculate the present value of the two assets. Determine the set of all interest rates {r} such that asset A is more valuable than asset Draw the present value of the assets as a function of the interest rate. Suppose r=0.2. Find the value X such that the present value of asset B is 12. Suppose the (one-period) interest rates are variable and given as follows: r01=0.1,r12=0.2, r23=0.3. Calculate the yield to maturity of asset A. (You can use Excel or ascientific calculator to find the solution numerically.)
Determine the present value of the following single amounts. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) 1. 2. 3. 4. Future Amount $ 24,000 $ 18,000 $ 29,000 $ 44,000 i 5% 9% 11% 10% n= 10 13 25 9 Present Value
How do you take the present value of a stream of cash flows. How does it work for annual payments, weekly payments, quarterly payments, and monthly payments? Provide examples of each
Future Value of an Annuity Find the future value of the following annuities. The first payment in these annuities is made at the end of Year 1, so they are ordinary annuities. (Notes: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in many situations, to see how changes in input variables affect the output variable. Also, note that you can leave values in the TVM register, switch to Begin Mode, press FV, and find the FV of the annuity due.) Do not round intermediate calculations. Round your answers to the nearest cent. $600 per year for 10 years at 14%. $ $300 per year for 5 years at 7%. $ $600 per year for 5 years at 0%. $ Now rework parts a, b, and c…
REQUIRED Study the information given below and answer the following questions: 1. Calculate the Payback Period (expressed in years, months and days). 2. Calculate the Accounting Rate of Return on average investment (expressed to two decimal places). 3. Identify TWO (2) reasons why Umdloti Limited should not use the accounting rate of return to evaluate capital investments. 4. Calculate the Net Present Value. 5. Calculate the Internal Rate of Return (expressed to two decimal places) if the net cash flows are R320 000 per year for five years. Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation.
Waiting periods. Fill in the number of periods for the following table,, using one of the three methods below: In (FV/PV) In (1 + r) a. Use the waiting period formula, n = b. Use the TVM keys from a calculator. c. Use the TVM function in a spreadsheet. Present Value 760.13 Future Value $ 1,585.01 Interest Rate 3% Number of Periods years (Round to the nearest whole number.)
Project A has an internal rate of return of 10%. Project B costs £100 this year and will generate a cash flow of £105 next year. The two projects are not mutually exclusive. 1. The company should only undertake project A 2. If the appropriate discount rate is below 10%, the company should invest in both projects 3. If the appropriate discount rate is above 5% the company should invest in both projects 4. If the appropriate discount rate is above 5%, the company should not undertake project B
Consider the following asset with it's returns over the last 3 years. The arithmetic mean is 8% 1yr 2yr 3yr 8% 4% 6% What is the geometric mean? (Be sure to go out at least 4 decimal places.) Respuesta:

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