Year ΕΟΥ 1 ΕΟΥ 2 ΕΟΥ 3 ΕΟΥ 4 ΕΟΥ 5 Sales 120 280 260 180 80
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A company enters into a project that will be unwound at the end of year 5, and it is expected that roughly 15% of the sales related to this project will be “on account” where the payments are made a year later, and where at the end of the project, all payments are received at EOY 5 (i.e. not received one year later). Show what the “
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- Zaire Electronics can make either of two investments at time 0. Assuming a required rate of return of 14 percent, determine for each project (a) the payback period, (b) the net present value, (c) the profitability index, and (d) the internal rate of return. Assume under MACRS the asset falls in the five-year property class and that the corporate tax rate is 34 percent. The initial investments required and yearly savings before depreciation and taxes are shown below: END OF YEAR PROJECT INVESTMENT A $28,000 B 20,000 1 2 3 4 $8,000 $8,000 $8,000 $8,000 5,000 5,000 6,000 6,000 7 56 $8,000 $8,000 $8,000 7,000 7,000 7,000Park Company is considering an investment of $32,500 that provides net cash flows of $14,600 annually for four years. What is the Investment's payback period? Numerator: 1 1 Payback Period Denominator: Payback Period Payback periodRegarding the proposed investments, XYZ INC. gathers the following data: a cash cost of 13,000, net annual cash flows of 45,000, and a present value factor of 5.40 rounded for cash inflows over a ten-year period. Find out all the relevant details that will be important when choosing an investment. Please let me know whether you think our firm should receive an investment based on the following information:
- For this investment, an initial amount of $25,000 should be paid this year (t=0). As of next year (t=1), five equal payments of $20,000 should also be paid (i.e., from t=1 to t=5). Thus, the sum of the required investment expenditure over those periods is $125,000. How much is the sum of the present value of the required investment expenditure over those periods, assuming that the annual interest rate is 5%?A firm, whose cost of capital is 8 percent, may acquire equipment for $146,825 and rent it to someone for a period of five years. Note: Although payment of rent is typically considered to be an annuity due, treat it as an ordinary annuity when completing this problem in a spreadsheet or when using present value factors. If the firm charges $38,730 annually to rent the equipment, what are the net present value and the internal rate of return on the investment? Use Appendix D to answer the questions. Use a minus sign to enter negative values, if any. Round your answers for the net present value to the nearest dollar and for the internal rate of return to the nearest whole number. NPV: $ IRR: % Should the firm acquire the equipment? The firm acquire the equipment as the net present value is , and the internal rate of return the firm's cost of capital. If the equipment has no estimated residual value, what must be the minimum annual rental charge for the firm to earn the required 8…CII, Incorporated, Invests $700,000 in a project expected to earn a 9% annual rate of return. The earnings will be reinvested in the project each year until the entire Investment is liquidated 11 years later. What will the cash proceeds be when the project is liquidated? (PV of $1. FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your "FV of a single amount" to 4 decimal places and final answer to the nearest whole dollar.) Present Value f (FV of a Single Amount) Future Value
- A company is planning to construct a market that will produce annual income of £ 5000000 for the first 25years. An investor was approached to finance the project on condition that he will be given the right to recoup his capital over 25 years. Advice the investor on the capital to be invested in the project if he can earn returns on his capital at 12 percent compound interest per annum.GTO Incorporated is considering an investment costing $214,720 that results in net cash flows of $32,000 annually for 10 years. (PV of $1. FV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided.) (a) What is the internal rate of return of this investment? (b) The hurdle rate is 8.5%. Should the company invest in this project on the basis of internal rate of return? a. Internal rate of return b. Should the company invest in this project on the basis of internal rate of return? %Crane Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows. Project Bono Project Edge Project Clayton Capital investment $163,000 $175,000 $204,000 Annual net income: Year 1 14,420 18,540 27,810 2 14,420 17,510 23,690 3 14,420 16,480 21,630 4 14.420 12,360 13,390 5 14,420 9,270 12,360 Total $72,100 $74,160 $98,880 Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) Click here to view PV table.
- A capital investment has an initial cost of $566,000. At the end of each of the next 9 years, it is expected to produce cash inflows of $143,000 and cash outflows of $53,000. After 9 years, it is expected to have a residual value of $17,000. Using a discount rate of 7%, what is this investment's net present value?.XYZ is considering a project that would last for 3 years and have a cost of capital of 18.20 percent. The relevant level of net working capital for the project is expected to be $2,020.30 immediately (at year 0); $4,790.00 in 1 year; $14,000.00 in 2 years; and $0.00 in 3 years. Relevant expected revenue, costs, depreciation, and cash flows from capital spending in years 0, 1, 2, and 3 are presented in the following table. The tax rate is 54.90 percent. What is the net present value of this project? . Year 0 Revenue $ Year 1 Year 2 Year 3 $12,500.00 $10,400.00 $12,100.00 $3,990.00 $3,980.00 $3,500.00 $2,200.00 $2,250.00 $2,100.00 0.00 $ 0.00 0.00 Costs Depreciation $ Cash flows from capital spending $-5,910.00 $1,350.00 $ 20.00 $3,770.00 $7794.24 (plus or minus $10) $580.25 (plus or minus $10) $5323.60 (plus or minus $10) $10279.59 (plus or minus $10) None of the above is within $10 of the correct answer
