Compute the net present value for each investment using 18% discount rate.

Question

Question : Rainbowbird Mfg. has received a special one-time order for 15,000 bird feeders at $3 per unit. Rainbowbird currently produces and sells 75,000 units at $7.00 each. This level represents 80% of its capacity. Production costs for these units are $3.50 per unit, which includes a $2.25 variable cost and $1.25 fixed cost. If Rainbowbird accepts this additional business, the effect on net income will be?

Answer 1

Question

Chapter 19, Problem 25P

1.

To determine

Compute the net present value for each investment using 18% discount rate.

2.

To determine

Compute the net present value for each investment using 14% discount rate.

3.

To determine

Identify the discount rate that would be more appropriate to compute the net present value.

4.

To determine

Calculate the net present value of the traditional equipment if cash flows are decreased by 50% for Years 3-10.

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Question : Rainbowbird Mfg. has received a special one-time order for 15,000 bird feeders at $3 per unit. Rainbowbird currently produces and sells 75,000 units at $7.00 each. This level represents 80% of its capacity. Production costs for these units are $3.50 per unit, which includes a $2.25 variable cost and $1.25 fixed cost. If Rainbowbird accepts this additional business, the effect on net income will be?

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Answer 2

Question

Chapter 19, Problem 25P

1.

To determine

Compute the net present value for each investment using 18% discount rate.

2.

To determine

Compute the net present value for each investment using 14% discount rate.

3.

To determine

Identify the discount rate that would be more appropriate to compute the net present value.

4.

To determine

Calculate the net present value of the traditional equipment if cash flows are decreased by 50% for Years 3-10.

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Answer 3

Question

Chapter 19, Problem 25P

1.

To determine

Compute the net present value for each investment using 18% discount rate.

2.

To determine

Compute the net present value for each investment using 14% discount rate.

3.

To determine

Identify the discount rate that would be more appropriate to compute the net present value.

4.

To determine

Calculate the net present value of the traditional equipment if cash flows are decreased by 50% for Years 3-10.

Expert Solution & Answer

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Answer 4

Question

Chapter 19, Problem 25P

1.

To determine

Compute the net present value for each investment using 18% discount rate.

2.

To determine

Compute the net present value for each investment using 14% discount rate.

3.

To determine

Identify the discount rate that would be more appropriate to compute the net present value.

4.

To determine

Calculate the net present value of the traditional equipment if cash flows are decreased by 50% for Years 3-10.

Expert Solution & Answer

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Answer 5

Chapter 19, Problem 25P

1.

To determine

Compute the net present value for each investment using 18% discount rate.

2.

To determine

Compute the net present value for each investment using 14% discount rate.

3.

To determine

Identify the discount rate that would be more appropriate to compute the net present value.

4.

To determine

Calculate the net present value of the traditional equipment if cash flows are decreased by 50% for Years 3-10.

Answer 6

Chapter 19, Problem 25P

1.

To determine

Compute the net present value for each investment using 18% discount rate.

Answer 7

Chapter 19, Problem 25P

1.

To determine

Compute the net present value for each investment using 18% discount rate.

Answer 8

2.

To determine

Compute the net present value for each investment using 14% discount rate.

Answer 9

2.

To determine

Compute the net present value for each investment using 14% discount rate.

Answer 10

3.

To determine

Identify the discount rate that would be more appropriate to compute the net present value.

Answer 11

3.

To determine

Identify the discount rate that would be more appropriate to compute the net present value.

Answer 12

4.

To determine

Calculate the net present value of the traditional equipment if cash flows are decreased by 50% for Years 3-10.

Answer 13

4.

To determine

Calculate the net present value of the traditional equipment if cash flows are decreased by 50% for Years 3-10.

Answer 14

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Answer 15

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Answer 19

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Answer 25

Ch. 19 - Explain the difference between independent...Ch. 19 - Explain why the timing and quantity of cash flows...Ch. 19 - Prob. 3DQ Ch. 19 - Prob. 4DQ Ch. 19 - What is the accounting rate of return?Ch. 19 - What is the cost of capital? What role does it...Ch. 19 - Prob. 7DQ Ch. 19 - Explain how the NPV is used to determine whether a...Ch. 19 - Explain why NPV is generally preferred over IRR...Ch. 19 - Prob. 10DQ

Compute the net present value for each investment using 18% discount rate.

Solution Summary: The author explains the Net Present Value method, which compares the initial cash outflow of investment with the present value of its cash inflows.

Compute the net present value for each investment using 18% discount rate.

Compute the net present value for each investment using 14% discount rate.

Identify the discount rate that would be more appropriate to compute the net present value.

Calculate the net present value of the traditional equipment if cash flows are decreased by 50% for Years 3-10.

Chapter 19 Solutions