Exercise 24-20A (Algo) IRR for investment using Excel LO P4 OptiLux is considering investing in an automated manufacturing system. The system requires an initial investment of $5.0 million, has a 20-year life, and will have zero salvage value. If the system is implemented, the company will save $780,000 per year in direct labor costs. The company requires a 12% return from its investments. Using Excel, compute the internal rate of return for the proposed investment. (Round your answer to 2 decimal places.) Internal rate of return
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- Exercise 24-20A (Algo) IRR for investment using Excel LO P4 OptiLux is considering investing in an automated manufacturing system. The system requires an initial investment of $6.0 million, has a 20-year life, and will have zero salvage value. If the system is implemented, the company will save $820,000 per year in direct labor costs. The company requires a 11% return from its investments. Using Excel, compute the internal rate of return for the proposed investment. (Round your answer to 2 decimal places.) Internal rate of return %Question 52 RESOURCES Wayne Company is considering a long-term investment project called ZIP. ZIP will require an investment of $125,368. It will have a useful life of 4 years and no salvage value. Annual Cash inflows would increase by $79,600, and annual cash outflows would increase by $39,700 The company's required rate of return is 10% Click here toview PW table. Calcul ate the net present value on this project. (If the net present value is negative, use elther a negative sign preceding the number eg -45 or parentheses eg (45) Round present value answer to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) uestion 3 Net present value uestion 7 Whether this project should be accepted?QUESTION 1 Agro Tech Corporation is considering investing in a new IT system for selling to its clients. The company has identified two new possible systems, which would be suitable for its customers. Only one of the systems can be selected and the directors are looking for guidance on which system would be the best. The company requires a 15% rate of return on projects of this nature. The installation cost per project will be R100 000 each, while systems can be disposed for R200 000 each after five- years life span. Cash flows for Agro Tech Corporation: IT System (Rands) PERIOD 1 2 3 4 5 SYSTEM A -4 000 000 R1 800 000 R1 700 000 R1 600 000 R1 500 000 R1 400 000 SYSTEM B -3 500 000 1 500 000 1 500 000 1 500 000 1 400 000 R1 300 000 Required: 1.1 Determine the payback period in years, months and days for both systems 1.2 Based on your calculations in 1.1, which system should Agro Tech Corporation consider? Why? 1.3 Calculate the Net Present Value for both systems. 1.4 Calculate the…
- Engineering economy - ENGR 3322 The International Parcel Service has installed a new radio frequency identification system to help reduce the number of packages that are incorrectly delivered. The capital investment in the system is $65,000, and the projected annual savings are tabled below. The system’s market value at the EOY five is negligible, and the MARR is 18% per year. Calculate the return on investment of the project a. 36% b. 37% c. 38% d. None of the choicesQ1 Bongaigaon Refineries wishes to install an air pollution control system in its facility situated in Assam. The system comprises of four types of equipments that involve capital investment and annual recurring costs as given in Table 6.1. Assume a useful life of 10 years for each type of equipment, no salvage value and that the company wants a minimum return of 10% on its capital. Which equipment should be chosen? Table 6.1 Costs for four equipments Investment () Annual recurring costs: Power () Labor (2) Maintenance (2) Taxes and insurance () Total annual recurring costs() A 2,00,000 Equipments B C 2,76,000 3,00,000 D 3,25,000 64,000 59,000 36,000 28,000 1,20,000 1,36,000 1,84,000 1,96,000 96,000 64,000 22,000 10,000 50,000 54,000 68,000 72,000 3,30,000 3,13,000 3,10,000 3,06,0001 Jlgu übja 1 Flint Systems is considering investing in production- management software that costs $630,000, has $67,000 residual value, and leads to cost savings of $1,650,000 per year over its five-year life. Calculate the average amount invested in the asset that should be used for calculating the accounting rate of return $697,000 .A $348,500 .B O $67,000 .c O $630,000 .D
- Walden Industries is considering investing in production-management software that costs $600,000, has $67,000 residual value, and leads to cost savings of $2,300,000 per year over its five-year life. Calculate the average amount invested in the asset that should be used for calculating the accounting rate of return. Question content area bottom Part 1 A. $333,500 В. $667,000 С. $67,000 D. $600,00010 Wayne Company is considering a long-term investment project called ZIP. ZIP will require an investment of $112.860. It will have a useful life of 4 years and no salvage value. Annual cash inflows would increase by $85,300, and annual cash outflows would increase by $47,300. The company's required rate of return is 12%. Click here to view PV table. 11 14 15 Calculate the internal rate of return on this project. (Round answers to O decimal places, eg. 15%) 16 17 18 19 20 Internal rate of return on this project is between % and %. Determine whether this project should be accepted? ABLE- The project should be accepted. (n) tymentQuestion 21 Petram is a company that manufactures aircraft parts. The company is considering various investment projects that may improve operational efficiency, and has already spent £30,000 gathering relevant data. It has now shortlisted three projects and asked you to recommend the best option. You have been provided with the following information about the projects: - Project I will last for 4 years. The initial outlay is £950,000 and the forecast operating cash inflow from the project is £350,000 for the first 2 years, £425,000 in year 3 and £150,000 in the last year. Annual depreciation expense associated with this project is £237,500. - Project II will last for 4 years. The initial outlay is £1,150,000 and the forecast operating cash inflow from the project is £550,000 in the first year and £350,000 for the following three years. Annual interest expense associated with this project is £45,000. - Project III will last for 4 years. The initial outlay is £850,000 and the forecast…
- Exercise 5 Dog Up! Franks is looking at a new sausage system with an installed cost of $445,000. This cost will be depreciated straight-line to zero over the project's five-year life, at the end of which the sausage system can be scrapped for $53,000. The sausage system will save the firm $139,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $25,000. If the tax rate is 23 percent and the discount rate is 11 percent, what is the NPV of this project? AnswerExercise 24-22A (Algo) Using Excel to compute IRR LO P4 Following is information on two alternative investments. Beachside Resort is considering building a new pool or spa. The company requires a 10% return from its investments. Initial investment Net cash flown in Pool Spa Year 1 Year 2 IRR 41,100 57,100 81,395 91,500 66,100 Compute the internal rate of return for each of the projects using excel functions. (Round your answers to 2 decimal places.) Year 3 Year 4 Year 5 % Pool Spa $ (171,000) $ (116,000) % 33,100 51,100 67,100 73,100 25,100Problem:15 Engine valves company is considering building an assembly plant .The decision has been narrowed down to two possibilities. The company desires to choose the best plant at a level of operation of 10,000 gadgets a month. Both plants have an expected life of 10 years and are expected to have any salvage value at the time of their retirements .The cost of capital is 10 percent . Assuming a zero income tax rate , suggest what would be the desirable choice ? Cost of the monthly output of 10,000 valves Large Plant Rs Small plant Rs Initial cost 30,00,000 22,93,500 Direct labour : First shift 15,00,000 per year 7,80,000 per year Second shift 9.00,000 per year Overheads 2,40,000 per year 2,10,000 per year