Week 4 Practice Set -- calculating NPV_Karl Schutte

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

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Required information A company that manufactures magnetic flow meters expects to undertake a project that will have the cash flows estimated. First cost, $. Equipment replacement cost in year 2, $ Annual operating cost, $/year Salvage value, $ Life, years -870,000 -300,000 -920,000 250,000 4 At an interest rate of 10% per year, what is the equivalent annual cost of the project? Find the AW value using tabulated factors. The equivalent annual cost of the project is $-1

You are given the following information. What is the initial cash outflow?   Purchase and installation of new equipment $12,000 Sale price of replaced equipment $  6,000 Book value of replaced equipment $  3,000 When the new equipment is installed:      Inventory increase $  2,000    Accounts payable increase $  1,000    Tax rate 40%       Group of answer choices   $7,400 $11,000 $7,000 $8,600

Page 1 of 1 HRM732 - Introduction to Financial & Management Accounting Case #4 - Due April 6, 2022 (Worth 10%) Lifetime Inc. wants to buy a new machine to be used in production that will replace an existing manual system. The cost of the new machine is $2,990,000. The equipment will last six years with no expected salvage value. The expected cash flows related to the implementation of the new machine is below. Year Cash Inflows Cash Outflows 1 $1,600,000 $950,000 2 1,600,000 950,000 3 1,600,000 950,000 4 1,600,000 950,000 5 1,600,000 950,000 6 1,600,000 950,000 Lifetime Inc’s required rate of return is 10% Required: c) Using both non-discounted and discounted capital budgeting approaches, determine if the company should replace the existing manual system with the purchase of this machine.

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Answer using excel and make sure answer is correct. here is the data only answer based on this

Q1: For the machines indicated below. Consider i= 10% per year First cost Annual cost Salvage value Life duration Machine A 20,000 $ 5,000 $ 7,500 $ 3 Machine B 25,000 4,000 6,000 4 A- Draw cash flow diagram for each machine for one cycle of each project B- Draw cash flow diagram for each project considering the LCM life cycle (Hint: different project duration, need to have the LCM life cycle) C- Compare the machines to select best alternative one based on Present worth analysis method D- Repeat part B considering Future worth analysis

I only need E. Answers for A - D A: 6.56% B: 6 Years C: NPV 78,529 D: NPV @ 14% -186,142 Please explain the answer for question E. I am unsure how to get it.