NPV Mutually exclusive projects Hook Industries is considering the replacement of one of its old metal stamping machines. Three alternative replacement machines are under consideration. The cash flows associated weach are shown in the following table. The firm's cost of capital is 10%a. Calculate the net presont value (NPV) of each pressb. Using NPV, evaluate the acceptability of each pressc. Rank the presses from best to worst using NPVd. Calculate the profitability index (Pl) for each press.e. Rank the presses from best to worst using Pl.a. The NPV of press A is $(Round to the nearest cent.)The NPV of press B is $(Round to the nearest cont.)The NPV of press C is $(Round to the nearest cent.)b. Based on NPV, Hook Industries should accept press A (Select from the drop-down menu.)Based on NPV, Hook Industries should accept press B. (Select from the drop-down menu)***DBased on NPV, Hook Industries should reject press C. (Select from the drop-down menu.)c. In ranking the presses from best to worst, Press C is the number 1 investment. (Select from the drop-down menu.)Press C is the number 2 investment. (Select from the drop-down menu.)Press B is the number 3 investment. (Select from the drop-down menu.)d. The Pl of press A is (Round f two decimal places.)The PI of press B is(Round to two decimal places.)The Pl of press C is(Round to two decimal places.)e. In ranking the presses from best to worst, Press C is the number 1 investment. (Select from the drop-down menu.)Press A is the number 2 investment. (Select from the drop-down menu.)Press B is the number 3 investment. (Select from the drop-down menu.) Data table(Click on the icon here in order to copy the contents of the data table belowinto a spreadsheet.)Machine AMachine BMachine CInitial investment (CF)$84,900$60,100$129,700Year (t)Cash inflows (CFt)1$18,300$11,800$49,5002$18,300$13,500$30,300$18,300$16,400$19,500$18,300$17,600$19,900$18,300$20,500$20,500$18,300$25,200$30,200$39,600$18,300$18,300$49,500567AWN348PrintDoneXKjone

Given Cash flows are as; Discount rate is 10% To Find: Net present Value Profitability Index

Answered: NPV Mutually exclusive projects Hock…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter12: Capital Investment Decisions

Section: Chapter Questions

Problem 52P

See similar textbooks

Similar questions

Assume a company is going to make an investment of $450,000 in a machine and the following are the cash flows that two different products would bring in years one through four. Which of the two options would you choose based on the payback method?
NPV-Mutually exclusive projects Hook Industries is considering the replacement of one of its old metal stamping machines. Three alternative replacement machines are under consideration. The cash flows associated with each are shown in the following table: 13%. a. Calculate the net present value (NPV) of each press. b. Using NPV, evaluate the acceptability of each press. c. Rank the presses from best to worst using NPV. d. Calculate the profitability index (PI) for each press. e. Rank the presses from best to worst using Pl. a. The NPV of press A is $ (Round to the nearest cent.) Data table (Click on the icon here into a spreadsheet.) Initial investment (CF) Year (t) 1 234 5 in order to copy the contents of the data table below 678 Machine A $85,000 $17,700 $17,700 $17,700 $17,700 $17,700 $17,700 $17,700 $17,700 Print Machine B $60,100 Cash inflows (CFt) $11,900 $13,700 $16,400 $18,400 $20,400 $25,100 Done Machine C $130,100 $50,200 $29,900 $20,400 $19,700 $20,200 $30,000 $40,500…
NPV—Mutually exclusive projects Hook Industries is considering the replacement of one of its old metal stamping machines. Three alternative replacement machines are under consideration. The relevant cash flows associated with each are shown in the following table: LOADING... . The firm's cost of capital is 12%. a. Calculate the net present value (NPV) of each press. b. Using NPV, evaluate the acceptability of each press. c. Rank the presses from best to worst using NPV. d. Calculate the profitability index (PI) for each press. e. Rank the presses from best to worst using PI. a. The NPV of press A is . (Round to the nearest cent.) The NPV of press B is . (Round to the nearest cent.) The NPV of press C is . (Round to the nearest cent.) b. Based on NPV, Hook Industries shouldpress A. (Select from the drop-down menu.) Based on NPV, Hook Industries should accept accept reject press B. (Select from the drop-down menu.) Based on NPV, Hook…
NPV—Mutually exclusive projects Hook Industries is considering the replacement of one of its old metal stamping machines. Three alternative replacement machines are under consideration. The relevant cash flows associated with each are shown in the following table: LOADING... . The firm's cost of capital is 12%. a. Calculate the net present value (NPV) of each press. b. Using NPV, evaluate the acceptability of each press. c. Rank the presses from best to worst using NPV. d. Calculate the profitability index (PI) for each press. e. Rank the presses from best to worst using PI. a. The NPV of press A is $nothing. (Round to the nearest cent.) The NPV of press B is $nothing. (Round to the nearest cent.) The NPV of press C is $nothing. (Round to the nearest cent.) b. Based on NPV, Hook Industries should ▼ accept reject press A. (Select from the drop-down menu.) Based on NPV, Hook Industries should ▼ accept reject press B. (Select from…
NPV and IRR analysis of projects Thomas Company is considering two mutually exclusive projects. The firm, which has a cost of capital of 10%, has estimated its cash flows as shown in the following table: a. Calculate the NPV of each project, and assess its acceptability. b. Calculate the IRR for each project, and assess its acceptability. a. The NPV of project A is $ (Round to the nearest cent.) Enter your answer in the answer box and then click Check Answer. 7 parts remaining Clear All Check Answer 10:3 5/11 Type here to search Cup
IRR: Mutually exclusive projects Nile Inc. wants to choose the better of two mutually exclusive projects that expand warehouse capacity. The projects' cash flows are shown in the following table: . The cost of capital is 18%. a. The internal rate of return (IRR) of project X is %. (Round to two decimal places.) Data table Is project X acceptable on the basis of IRR? (Select the best answer below.) (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Yes O No Project X $500,000 Project Y $310,000 The internal rate of return (IRR) of project Y is %. (Round to two decimal places.) Initial investment (CF) Is project Y acceptable on the basis of IRR? (Select the best answer below.) Year (t) Cash inflows (CF,) $120,000 $140,000 $105,000 $60,000 1 $100,000 O Yes $160,000 O No $170,000 $190,000 b. Which project is preferred? (Select the best answer below.) $250,000 $30,000 OA. Project X N 34 5
IRR-Mutually exclusive projects Bell Manufacturing is attempting to choose the better of two mutually exclusive projects for expanding the firm's warehouse capacity. The relevant cash flows for the projects are shown in the following table: E The firm's cost of capital is 15%. a. Calculate the IRR for each of the projects. Assess the acceptability of each project on the basis of the IRRS. b. Which project is preferred? a. The internal rate of return (IRR) of project X is %. (Round to two decimal places.) Is project X acceptable on the basis of IRR? (Select the best answer below.) Yes No The internal rate of return (IRR) of project Y is %. (Round to two decimal places.) Is project Y acceptable on the basis of IRR? (Select the best answer below.) Yes 6 Data Table No b. Which project is preferred? (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) O A. Project Y Project X $500,000 Project Y $290,000 B. Neither…
IRR-Mutually exclusive projects Bell Manufacturing is attempting to choose the better of two mutually exclusive projects for expanding the firm's warehouse capacity. The relevant cash flows for the projects are shown in the following table: The firm's cost of capital is 13%. a. Calculate the IRR for each of the projects. Assess the acceptability of each project on the basis of the IRRs. b. Which project is preferred? a. The internal rate of return (IRR) of project X is%. (Round to two decimal places.)
IRR-Mutually exclusive projects Bell Manufacturing is attempting to choose the better of two mutually exclusive projects for expanding the firm's warehouse capacity. The relevant cash flows for the projects are shown in the following table: 9. The firm's cost of capital is 14%. a. Calculate the IRR for each of the projects. Assess the acceptability of each project on the basis of the IRRS. b. Which project is preferred? a. The internal rate of return (IRR) of project X is %. (Round to two decimal places.) Data Table Is project X acceptable on the basis of IRR? (Select the best answer below.) No (Click on the icon located on the top-right corner of the data table below in order to Yes copy its contents into a spreadsheet.) Project X Initial investment (CF) $500,000 Project Y $300.000 The internal rate of return (IRR) of project Y is %. (Round to two decimal places.) Is project Y acceptable on the basis of IRR? (Select the best answer below.) Year (f) Cash inflows (CF,) 1 $110,000…
Project X Initial investment (CF) $500,000 Year (1) 1 2 3 4 5 Project Y $330,000 Cash inflows (CFt) $130,000 $120,000 $130,000 $200,000 $240,000 $150,000 $130,000 $75,000 $80,000 $60,000
Net present value method, internal rate of return method, and analysis for a service company The management of Advanced Alternative Power Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows: Year 3 4 5 6 1 7 8 2 9 10 3 4 The wind turbines require an investment of $713,750, while the biofuel equipment requires an investment of $1,518,500. No residual value is expected from either project. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.909 0.893 0.870 0.833 2 1.690 1.626 1.528 2.106 0.943 1.833 2.673 3.465 4.212 Wind Turbines $250,000 250,000 250,000 250,000 3.170 3.791 4.917 4.355 5.582 4.868 6.210 5.335 6.802 5.759 7.360 6.145 Required: Biofuel Equipment 1.736 2.487 Amount to be invested Net present value $500,000 500,000 500,000 500,000 Wind Turbines Biofuel Equipment 2.402 3.037 Present value of annual net cash flows 2.283 2.855 3.605 3.353 4.111 3.785 4.564 4.160 4.968 4.487 5.328…
Unequal lives-ANPV approach Portland Products is considering the purchase of one of three mutually exclusive projects for increasing production efficiency. The firm plans to use a 13.1% cost of capital to evaluate these equal-risk projects. The initial investment and annual cash inflows over the life of each project are shown in the following table. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Initial investment (CF) Year (t) 1 2345678 u. VUIMMU BIV TRE Project X $78,000 $16,700 25,100 33,000 40,800 PETIT. Project X Project Z Project Y Project Y $52,000 Cash inflows (CF) $27,800 38,200 a. Calculate the NPV for each project over its life. Rank the projects in descending order on the basis of NPV. b. Use the annualized net present value (ANPV) approach to evaluate and rank the projects in descending order on the basis of ANPV c. Compare and contrast your findings in parts (a) and (b). Which project would you recommend that the firm…

SEE MORE QUESTIONS

Recommended textbooks for you

Managerial Accounting: The Cornerstone of Busines…

Accounting

ISBN:

9781337115773

Author:

Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:

Cengage Learning

Managerial Accounting

Accounting

ISBN:

9781337912020

Author:

Carl Warren, Ph.d. Cma William B. Tayler

Publisher:

South-Western College Pub

Financial And Managerial Accounting

Accounting

ISBN:

9781337902663

Author:

WARREN, Carl S.

Publisher:

Cengage Learning,

Managerial Accounting: The Cornerstone of Busines…

Accounting

ISBN:

9781337115773

Author:

Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:

Cengage Learning

Managerial Accounting

Accounting

ISBN:

9781337912020

Author:

Carl Warren, Ph.d. Cma William B. Tayler

Publisher:

South-Western College Pub

Financial And Managerial Accounting

Accounting

ISBN:

9781337902663

Author:

WARREN, Carl S.

Publisher:

Cengage Learning,

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

SEE MORE TEXTBOOKS