QUESTION 9Home Express Moving Company is considering purchasing new equipment that costs $728,000. Its management estimates thatthe equipment will generate cash inflows of $50,000 semiannually for its 2 year life.Present value of $1:6%123450.9430.8900.8400.7920.747O $235,750O $100,000O $200,000Ⓒ$152,6007%8%0.9170.9260.857 0.8420.7720.7080.6509%0.9350.8730.816 0.7940.7630.7350.7130.68110%0.9090.8260.7510.6830.621The company's annual required rate of return is 14%.Using the factors in the table, calculate the present value of the cash flows

Present Value: The present value (PV) of a future amount of money or stream of cash flows is the…

Home Express Moving Company is considering purchasing new equipment that costs $728,000. Its management estimates that the equipment will generate cash inflows of $50,000 semiannually for its 2 year life. Present value of $1: 6% 1 2 3 4 5 0.943 0.890 0.840 0.792 0.747 7% 8% 9% 0.926 0.917 0.857 0.842 0.794 0.772 0.735 0.708 0.935 0.873 0.816 0.763 0.713 0.681 0.650 10% 0.909 0.826 0.751 0.683 0.621 The company's annual required rate of return is 14%. Using the factors in the table, calculate the present value of the cash flows O $235,750 O $100,000 O $200,000 O $152,600

Home Express Moving Company is considering purchasing new equipment that costs $728,000. Its management estimates that the equipment will generate cash inflows of $50,000 semiannually for its 2 year life. Present value of $1: 6% 1 2 3 4 5 0.943 0.890 0.840 0.792 0.747 7% 8% 9% 0.926 0.917 0.857 0.842 0.794 0.772 0.735 0.708 0.935 0.873 0.816 0.763 0.713 0.681 0.650 10% 0.909 0.826 0.751 0.683 0.621 The company's annual required rate of return is 14%. Using the factors in the table, calculate the present value of the cash flows O $235,750 O $100,000 O $200,000 O $152,600

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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Note: - You are attempting question 8 MNO company is evaluating a proposal for purchase of equipment which will cost S180,000. The cash inflows from the use of equipment is given below: Year Cash flow S60,000 $40,000 S70,000 $125,000 $35,000 1 3 4 Payback period for the proposal is: а. 3 years b. 2 years с. 4 years d. 3.08 years
Door to Door Moving Company is considering purchasing new equipment that costs $734,000. Its management estimates that the equipment will generate cash inflows as follows: Year 1 2 3 4 5 $204,000 204,000 262,000 262,000 158,000 Present value of $1: 6% 1 2 3 4 5 0.943 0.890 0.840 0.792 0.747 7% A. $36,312 B. $886,000 OC. $871,928 OD. $786,000 0.935 0.873 0.816 0.763 0.713 8% 0.926 0.857 0.794 0.735 0.681 9% 0.917 0.842 0.772 0.708 0.650 10% 0.909 0.826 0.751 0.683 0.621 The company's annual required rate of return is 8%. Using the factors in the table, calculate the present value of the cash inflows. (Round all calculations to the nearest whole dollar.)
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Machine B Machine A R100 000 R110 000 Initial cost 5 years 5 years Expected economic life R10 000 0. Expected disposal/residual value R R Expected net cash inflows 34 000 33 000 End of: Year 1 27 000 33 000 Year 2 Year 3 32 000 33 000 Year 4 30 000 33 000 Year 5 26 000 33 000 Depreciation per year 18 000 22 000 The company estimates that its cost of capital is 14%. Calculate the payback period for Machine A and B (answers must be expressed in years, moi and days). 2.1 2.2 Calculate the accounting rate of return (on average investment) for Machine A. (answer roundec to 2 decimal places).
Rocco Manufacturing is considering following two investment proposals: Proposal X Proposal Y Investment $740,000 $508,000 Useful life 5 years 4 years Estimated annual net cash inflows received at the end of each year $154,000 $92,000 Residual value $66,000 $0 Depreciation method Straight-line Straight-line Annual discount rate 10% 9% Compute the present value of the future cash inflows from Proposal X.
еBook Print Item Cash Payback Period, Net Present Value Analysis, and Qualitative Considerations The plant manager of Shenzhen Electronics Company is considering the purchase of new automated assembly equipment. The new equipment will cost $102,000. The manager believes that the new investment will result in direct labor savings of $34,000 per year for 10 years. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 3.465 3.170 3.037 2.855 2.589 4.212 3.791 3.605 3.353 2.991 6. 4.917 4.355 4.111 3.785 3.326 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9. 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a. What is the payback period on this project? years b. What is the net present value, assuming a 12% rate of return? Use the table provided above. Round to the nearest whole dollar. Net present value c. What else should the manager consider…
Heip Save & Exit Submit Homer Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would resuit in an annual increase in net Income after tax of $153,000. The equipment will have an initial cost of $510,000 and have a 5-year life, If the salvage vaiue of the equipment is estimated to be $27,000, what is the annual net cash flow? Multiple Choice 12 $126,000 $56,400 $249.600 $180.000
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9. Giessen Construction Company is considering purchasing new equipment costing SAR 3,250,000. The company's management has estimated that the equipment will generate cash flows as follows (SAR): Year 1 3 4 980,000 875,000 850,000 750,000 The company's required rate of return is 9%. Calculate the accounting rate of return, assuming a salvage value of SAR 250,000. a. 7.22% b. 8.45% c. SAR 90,000 6.50%
ic Yo NS io cer ist bun ngs nnée Current Attempt in Progress Blossom Manufacturing Co. is evaluating two projects. The company uses payback criteria of three years or less. Project A has a cost of $905,000, and project B's cost is $1,247,300. Cash flows from both projects are given in the following table. Year 1 2 3 4 Project A $86,212 313,562 427,594 285,552 Project B $586,212 413,277 231,199 What are their discounted payback periods? (Round answers to 2 decimal places, e.g. 15.25. If discounted payback period exceeds life of the project, enter 0.00 for the answer.) Discounted payback period of project A Discounted payback period of project B will he accepted with a discount rate of 8 percent? átv zoom
Problem 6 - Shirt Corporation is considering purchasing equipment that costs $60,000 and is expected to provide the following cash inflows over its five-year useful life: Year Cash Inflow 1 $18,000 2 $22,000 3 $24,000 4 $16,000 5 $ 9,000 Calculate the payback period for this investment.

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