Chapter 12: Graded HomeworkQuestion 11 of 15 < >View PoliciesCurrent Attempt in Progress-/1 !Sandhill Company is considering a long-term investment project called ZIP. ZIP will require an investment of $132,100. It will have auseful life of 4 years and no salvage value. Annual cash inflows would increase by $80,500, and annual cash outflows would increase by$38,500. The company's required rate of return is 10%. Click here to view the factor table.Calculate the net present value on this project. (If the net present value is negative, use either a negative sign preceding the number eg-45 orparentheses eg (45). Round present value answer to O decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in thefactor table provided.)Net present valueWhether this project should be accepted?The project should beacceptedeTextbook and MediaeTextbookAssistance UsedSave for Later Last saved 1 second ago.Attempts: 0 of 3 usedCochmit Annuar

The Net Present Value (NPV) is a measure of the profitability of a project and is calculated by…

Answered: Chapter 12: Graded Homework Question 11…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section: Chapter Questions

Problem 19P

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Coffer Company is analyzing two potential investments. Cost of machine Project X $ 97,090 Net cash flow: Year 1 Year 2 Year 3 Year 4 Project Y $ 72,000 36,500 3,700 36,500 33,500 36,500 33,500 0 13,000 If the company is using the payback period method, and it requires a payback period of three years or less, which project(s) should be selected? Multiple Choice ○ Project Y. ○ Project X. Both X and Y are acceptable projects. Neither X nor Y is an acceptable project. Project Y because it has a lower Initial Investment.
Porter Company is analyzing two potential Investments. Project X $ 97,090 Initial investment Net cash flow: Year 1 Year 2 Year 3 Year 4 Multiple Choice If the company is using the payback period method, and it requires a payback of three years or less, which project(s) should be selected? O 32,500 32,500 32,500 0 Both X and Y are acceptable projects. O Project Y. Project Y $ 77,000 Project Y because it has a lower Initial Investment. Project X 5,700 34,500 34,500 25,000 Neither X nor Y is an acceptable project.
Porter Company is analyzing two potential investments Initial investment Net cash flow: Year 1 Year 2 Year 3 Year 4 Project X Project Y $ 75,900 $ 64,000 26,000 26,000 26,000 4,400 28,000 28,000 20,000 If the company is using the payback period method, and it requires a payback of three years or less, which project(s) should be selected? 0
Porter Company is analyzing two potential Investments. Project X $ 75,900 Initial investment Net cash flow: Year 1 Year 2 Year 3 Year 4 Multiple Choice O If the company is using the payback period method, and it requires a payback of three years or ess, which project(s) should be selected? Project Y. 26,000 26,000 26,000 0 Project X. Project Y $ 64,000 Both X and Y are acceptable projects. 4,400 28,000 28,000 20,000 Neither X nor Y is an acceptable project. Project Y because it has a lower Initial Investment.
Clear my choice The total investment required for a project is estimated at OMR100, 000. The cash flows expected from project for the first four years are given below Year Project A Year 1 25,000 Year 2 38,500 Year 3 42,000 Year 4 48,000 What will be pay back period? 2.86 O b. B.23 c. 3.03 d. 2.63 All the options are wrong o search Tenovo 近

Question 29 of 30. View Policies Show Attempt History Current Attempt in Progress X Your answer is incorrect. 0/0.1 E E Strange Manufacturing Company is purchasing a production facility at a cost of $21 million. The firm expects the project to generate annual cash flows of $7 million over the next five years. Its cost of capital is 18 percent. What is the internal rate of return on this project? (Do not round intermediate computations. Round final answer to the nearest percent.) 19% 18% 20% 17% eTextbook and Media D Save for Later Attempts: 1 of 3 used Submit Answer Using multiple attempts will impact your score. 20% score reduction after attempt 2 Search
NPV A project has an initial cost of $60,000, expected net cash inflows of $10,000 per year for 10 years, and a cost of capital of 8%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to the nearest cent. 24
Moving to another question will save this response. Question 5 XYZ is evaluating a project that would last for 3 years. The project's cost of capital is 17.20 percent, its NPV is $43,100.00 and the expected cash flows are presented in the table. What is 27 Years from today 0 1 2 3 Expected Cash Flow (in $) -53,600 71,700 -13,000 X O An amount equal to or greater than $69,384.00 but less than $75,459.00 O An amount equal to or greater than $43,100.00 but less than $52,436.00 O An amount equal to or greater than $52,436.00 but less than $63,115.00 O An amount equal to or greater than $63,115.00 but less than $69,384.00 O An amount less than $43,100.00 or an amount greater than $75,459.00
QUESTION 5 , Your company is considering to choose one of the two projects: Project Gold and Project Diamond. Each project will last 5 years and have no salvage value at the end. The company's required rate of return for all investment projects is 9%. The cash flows of two projects are provided below. Gold Diamond Cost $485 000 $520 000 Future Cash Flows Year 1 105 850 117 050 Year 2 153 250 162 400 Year 3 225 650 275 500 Year 4 245 000 255 000 Year 5 250 350 260 000 Required: a. Identify which project should your company accept based on Net Present l.un method? 4 /6 b. Identify which project should your company accept based on Discounte method if the payback criterion is maximum 2.5 years? rio
Question 3: Your Company is considering to choose one of the two projects: Project A and Project B. Each project will last 4 years and have no salvage value at the end. The company's required rate of return for all investment projects is 10%. The cash flows of Project A and Project B is provided below. Project A Project B Cost $250 000 $350 000 Future Cash Flows Year 1 55 750 97 050 130 250 165 700 159 000 102 090 215 000 305 000 Year2 Year 3 Year 4 Required: Identify which project your company should accept based on Profitability Index (PI)?
Homework, Chapter 26 Average Rate of Return The following data are accumulated by Watershed Inc. in evaluating two competing capital investment proposals: Project A Project z Amount of investment $80,000 $92,000 Useful life 4 years 7 years Estimated residual value Estimated total income over the useful life $8,800 $27,370 Determine the expected average rate of return for each project. Round your answers to one decimal place. Project A Project z
NPV A project has an initial cost of $40,000, expected net cash inflows of $10,000 per year for 6 years, and a cost of capital of 8%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to the nearest cent. $ Profitability Index A project has an initial cost of $35,000, expected net cash inflows of $15,000 per year for 8 years, and a cost of capital of 11%. What is the project's PI? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer two decimal places.

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