You are evaluating two different cookie-baking ovens. The Pillsbury 707 costs $71,000, has a 5-year life, and has an annual operatingcash flow (after-tax) of -$11,500 per year. The Keebler CookieMunster costs $97,500, has a 7-year life, and has an annual OCF (after-tax) of -$9,500 per year.If your discount rate is 12 percent, what is each machine's EAC?Note: Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.Pillsbury 707Keebler CookieMunsterEAC Compute the NPV statistic for Project Y if the appropriate cost of capital is 11 percent.Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answerto 2 decimal places.Project YTime:01Cash flow:-$ 9,300$ 3,6102$ 4,4403$ 1,7804$ 560NPVShould the project be accepted or rejected?(Click to select)RejectedAccepted

Part 1: EAC Calculation for Pillsbury 707 and Keebler CookieMunsterAnswer:EAC for Pillsbury 707:…

Answered: You are evaluating two different…

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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Your firm needs to purchase 1,200 traffic cones from a supplier. One supplier demands apayment of $1,000.00 today plus $10.59 per cone payable in one year. Another supplier willask for no payment today and $11.59 per cone, also payable in one year. If the discountrate is 8.200% per year compounded annually, how much does your firm save (in terms oftoday’s dollars) by taking the less expensive offer compared to the more expensive offer?
Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be $5.05 million per year. Your upfront setup costs to be ready to produce the part would be $7.98 million. Your discount rate for this contract is 7.8%. a. What is the IRR? b. The NPV is $5.08 million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule? a. What is the IRR? The IRR is %. (Round to two decimal places.)
Bha
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Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be $5.06 million per year. Your upfront setup costs to be ready to produce the part would be $7.97 million. Your discount rate for this contract is 8.1%. a. What is the IRR? b. The NPV is $5.05 million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule?
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Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $5.00 million per year. Your upfront setup costs to be ready to produce the part would be $8.00 million. Your discount rate for this contract is 8.0%. a. What does the NPV rule say you should do? b. If you take the contract, what will be the change in the value of your firm? Question content area bottom Part 1 a. What does the NPV rule say you should do? The NPV of the project is $ enter your response here XX million. (Round to two decimal places.)
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Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be $5.09 million per year. Your upfront setup costs to be ready to produce the part would be $7.92 million. Your discount rate for this contract is 8.3%. a. What is the IRR? b. The NPV is $5.13 million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule? a. What is the IRR? The IRR is %. (Round to two decimal places.) b. The NPV is $5.13 million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule? (Select from the drop-down menu.) The IRR rule with the NPV rule.
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