Net Present Value (NPV): NPV is a measurement of the profit of the any project or business. NPV is calculated by the net present value of cash inflow during the life of the asset, minus net present value of cash outflow (including initial investments). Accounting Rate of Return (ARR): The accounting rate of return is the amount of return, investor can expect from investment made. ARR calculates by dividing the average profit by average investment. It is also account “Average Rate of Return”. Internal Rate of Return (IRR): IRR is the discounting rate at which the present value of cash inflow will be equal to the present value of cash outflow. At, IRR net present value of an investment will be zero. Payback: The payback period or payback is the period of time required to recover the cost of investment or capital outlay. The shorter the payback period, the investment will be more attractive. It is calculated by dividing total investment by expected annual cash flow . 1. To Calculate: The IRR and NPV for Option Alpha and Beta and find which option should be pursued.

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Answer 1

Question

Chapter 26, Problem P26.33APGA

To determine

Concept Introduction:

Net Present Value (NPV): NPV is a measurement of the profit of the any project or business. NPV is calculated by the net present value of cash inflow during the life of the asset, minus net present value of cash outflow (including initial investments).

Accounting Rate of Return (ARR): The accounting rate of return is the amount of return, investor can expect from investment made. ARR calculates by dividing the average profit by average investment. It is also account “Average Rate of Return”.

Internal Rate of Return (IRR): IRR is the discounting rate at which the present value of cash inflow will be equal to the present value of cash outflow. At, IRR net present value of an investment will be zero.

Payback: The payback period or payback is the period of time required to recover the cost of investment or capital outlay. The shorter the payback period, the investment will be more attractive. It is calculated by dividing total investment by expected annual cash flow.

1.

To Calculate: The IRR and NPV for Option Alpha and Beta and find which option should be pursued.

To determine

2.

To Explain: The relationship between IRR and NPV and based on this relationship judger the answer given in solution 1.

To determine

3.

To Calculate: The IRR and NPV for Option Alpha and Beta, based on revised initial cost.

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Saved Required information [The following information applies to the questions displayed below.] On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $84,310 in assets to launch the business. On December 31, the company's records show the following items and amounts. $ 10,200 Cash withdrawals by owner Cash Accounts receivable 15,200 Consulting revenue Office supplies 3,550 Rent expense Land 45,990 Office equipment 18,310 Accounts payable 8,740 Salaries expense Telephone expense Miscellaneous expenses Owner investments 84,310 $ 2,340 15,200 3,910 7,350 790 610 Use the above information to prepare a December 31 balance sheet for Ernst Consulting. AC Graw Hill ERNST CONSULTING Balance Sheet December 31 $ 0 G-SYNC $ 0 S 0 B

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Answer 2

Question

Chapter 26, Problem P26.33APGA

To determine

Concept Introduction:

Net Present Value (NPV): NPV is a measurement of the profit of the any project or business. NPV is calculated by the net present value of cash inflow during the life of the asset, minus net present value of cash outflow (including initial investments).

Accounting Rate of Return (ARR): The accounting rate of return is the amount of return, investor can expect from investment made. ARR calculates by dividing the average profit by average investment. It is also account “Average Rate of Return”.

Internal Rate of Return (IRR): IRR is the discounting rate at which the present value of cash inflow will be equal to the present value of cash outflow. At, IRR net present value of an investment will be zero.

Payback: The payback period or payback is the period of time required to recover the cost of investment or capital outlay. The shorter the payback period, the investment will be more attractive. It is calculated by dividing total investment by expected annual cash flow.

1.

To Calculate: The IRR and NPV for Option Alpha and Beta and find which option should be pursued.

To determine

2.

To Explain: The relationship between IRR and NPV and based on this relationship judger the answer given in solution 1.

To determine

3.

To Calculate: The IRR and NPV for Option Alpha and Beta, based on revised initial cost.

Expert Solution & Answer

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Answer 3

Question

Chapter 26, Problem P26.33APGA

To determine

Concept Introduction:

Net Present Value (NPV): NPV is a measurement of the profit of the any project or business. NPV is calculated by the net present value of cash inflow during the life of the asset, minus net present value of cash outflow (including initial investments).

Accounting Rate of Return (ARR): The accounting rate of return is the amount of return, investor can expect from investment made. ARR calculates by dividing the average profit by average investment. It is also account “Average Rate of Return”.

Internal Rate of Return (IRR): IRR is the discounting rate at which the present value of cash inflow will be equal to the present value of cash outflow. At, IRR net present value of an investment will be zero.

Payback: The payback period or payback is the period of time required to recover the cost of investment or capital outlay. The shorter the payback period, the investment will be more attractive. It is calculated by dividing total investment by expected annual cash flow.

1.

To Calculate: The IRR and NPV for Option Alpha and Beta and find which option should be pursued.

To determine

2.

To Explain: The relationship between IRR and NPV and based on this relationship judger the answer given in solution 1.

To determine

3.

To Calculate: The IRR and NPV for Option Alpha and Beta, based on revised initial cost.

Expert Solution & Answer

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Answer 4

Question

Chapter 26, Problem P26.33APGA

To determine

Concept Introduction:

Net Present Value (NPV): NPV is a measurement of the profit of the any project or business. NPV is calculated by the net present value of cash inflow during the life of the asset, minus net present value of cash outflow (including initial investments).

Accounting Rate of Return (ARR): The accounting rate of return is the amount of return, investor can expect from investment made. ARR calculates by dividing the average profit by average investment. It is also account “Average Rate of Return”.

Internal Rate of Return (IRR): IRR is the discounting rate at which the present value of cash inflow will be equal to the present value of cash outflow. At, IRR net present value of an investment will be zero.

Payback: The payback period or payback is the period of time required to recover the cost of investment or capital outlay. The shorter the payback period, the investment will be more attractive. It is calculated by dividing total investment by expected annual cash flow.

1.

To Calculate: The IRR and NPV for Option Alpha and Beta and find which option should be pursued.

To determine

2.

To Explain: The relationship between IRR and NPV and based on this relationship judger the answer given in solution 1.

To determine

3.

To Calculate: The IRR and NPV for Option Alpha and Beta, based on revised initial cost.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 5

Chapter 26, Problem P26.33APGA

To determine

Concept Introduction:

Net Present Value (NPV): NPV is a measurement of the profit of the any project or business. NPV is calculated by the net present value of cash inflow during the life of the asset, minus net present value of cash outflow (including initial investments).

Accounting Rate of Return (ARR): The accounting rate of return is the amount of return, investor can expect from investment made. ARR calculates by dividing the average profit by average investment. It is also account “Average Rate of Return”.

Internal Rate of Return (IRR): IRR is the discounting rate at which the present value of cash inflow will be equal to the present value of cash outflow. At, IRR net present value of an investment will be zero.

Payback: The payback period or payback is the period of time required to recover the cost of investment or capital outlay. The shorter the payback period, the investment will be more attractive. It is calculated by dividing total investment by expected annual cash flow.

1.

To Calculate: The IRR and NPV for Option Alpha and Beta and find which option should be pursued.

To determine

2.

To Explain: The relationship between IRR and NPV and based on this relationship judger the answer given in solution 1.

To determine

3.

To Calculate: The IRR and NPV for Option Alpha and Beta, based on revised initial cost.

Answer 6

Chapter 26, Problem P26.33APGA

To determine

Concept Introduction:

Net Present Value (NPV): NPV is a measurement of the profit of the any project or business. NPV is calculated by the net present value of cash inflow during the life of the asset, minus net present value of cash outflow (including initial investments).

Accounting Rate of Return (ARR): The accounting rate of return is the amount of return, investor can expect from investment made. ARR calculates by dividing the average profit by average investment. It is also account “Average Rate of Return”.

Internal Rate of Return (IRR): IRR is the discounting rate at which the present value of cash inflow will be equal to the present value of cash outflow. At, IRR net present value of an investment will be zero.

Payback: The payback period or payback is the period of time required to recover the cost of investment or capital outlay. The shorter the payback period, the investment will be more attractive. It is calculated by dividing total investment by expected annual cash flow.

1.

To Calculate: The IRR and NPV for Option Alpha and Beta and find which option should be pursued.

Answer 7

Chapter 26, Problem P26.33APGA

To determine

Concept Introduction:

Net Present Value (NPV): NPV is a measurement of the profit of the any project or business. NPV is calculated by the net present value of cash inflow during the life of the asset, minus net present value of cash outflow (including initial investments).

Accounting Rate of Return (ARR): The accounting rate of return is the amount of return, investor can expect from investment made. ARR calculates by dividing the average profit by average investment. It is also account “Average Rate of Return”.

Internal Rate of Return (IRR): IRR is the discounting rate at which the present value of cash inflow will be equal to the present value of cash outflow. At, IRR net present value of an investment will be zero.

Payback: The payback period or payback is the period of time required to recover the cost of investment or capital outlay. The shorter the payback period, the investment will be more attractive. It is calculated by dividing total investment by expected annual cash flow.

1.

To Calculate: The IRR and NPV for Option Alpha and Beta and find which option should be pursued.

Answer 8

To determine

2.

To Explain: The relationship between IRR and NPV and based on this relationship judger the answer given in solution 1.

Answer 9

To determine

2.

To Explain: The relationship between IRR and NPV and based on this relationship judger the answer given in solution 1.

Answer 10

To determine

3.

To Calculate: The IRR and NPV for Option Alpha and Beta, based on revised initial cost.

Answer 11

To determine

3.

To Calculate: The IRR and NPV for Option Alpha and Beta, based on revised initial cost.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 26 - Prob. 1QC Ch. 26 - Prob. 2QC Ch. 26 - Prob. 3QC Ch. 26 - Prob. 4QC Ch. 26 - Prob. 5QC Ch. 26 - Prob. 6QC Ch. 26 - Prob. 7QC Ch. 26 - The IRR is Learning Objective 4 the interest rate...Ch. 26 - Prob. 9QC Ch. 26 - Ian Corp, is considering two expansion projects....

Concept explainers

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2.

To Explain: The relationship between IRR and NPV and based on this relationship judger the answer given in solution 1.

3.

To Calculate: The IRR and NPV for Option Alpha and Beta, based on revised initial cost.

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Chapter 26 Solutions

Concept explainers

Videos

2. To Explain: The relationship between IRR and NPV and based on this relationship judger the answer given in solution 1.

3. To Calculate: The IRR and NPV for Option Alpha and Beta, based on revised initial cost.

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Chapter 26 Solutions

2.

To Explain: The relationship between IRR and NPV and based on this relationship judger the answer given in solution 1.

3.

To Calculate: The IRR and NPV for Option Alpha and Beta, based on revised initial cost.