Crane Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses a 8 percent discount rate for their production systems. Year 0 1 2 3 System 1 -$14,800 14,800 14,800 14,800 System 2 -$43,600 33,000 33,000 The firm should invest in 33,000 What are the payback periods for production systems 1 and 2? (Round answers to 2 decimal places, e.g. 15.25.) Payback period of System 1 is years and Payback period of System 2 is years If the systems are mutually exclusive and the firm always chooses projects with the lowest payback period, in which system should the firm invest?
Q: Determine m, n, and i for money earning 7.9% compounded monthly for 27 months. m= n= i= (Type an…
A: “Since you have posted multiple questions, we will provide the solution only to the first question…
Q: Suppose that you buy a two-year 8% bond at its face value. (a) What will be your total nominal…
A: Nominal return refers to the rate of return on investment without adjustment for inflation.For the…
Q: You want to be able to withdraw $45,000 each year for 30 years. Your account earns 10% interest. a)…
A: A series of payments made during a period with equal intervals of time is known as annuity. The…
Q: Solve the following problems regarding bank loans, bonds, and stocks. Assume an interest rate of 11…
A: Present value is an estimate of the present value of future cash values that may be received at a…
Q: Professor's Annulty Corp. offers a lifetime annulty to retiring professors. For a lump payment today…
A: An annuity refers to a series of periodic payments that are provided in exchange for a lump sum…
Q: 5. Anthony plans saving money for his retirement. Beginning one month from now, he will beg…
A: In retirement planning the amount required in retirement should be the future value required for…
Q: You found the following stock quote for DRK Enterprises, Incorporated, at your favorite website. You…
A: Annual dividend = $0.75Dividend yield = 1.30%Volume = 18,649,130
Q: A new computer system will require an initial outlay of $20, 500, but it will increase the firm's…
A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…
Q: i) Calculate the pay-back period for each project (Industry standard is 3.5 years) ii) If the…
A: Capital budgeting is a financial process used by businesses to evaluate potential long-term…
Q: A firm's bonds have a maturity of 14 years with a $1,000 face value, have an 11% semiannual coupon,…
A: Compound = Semiannually = 2Face Value = $1000Coupon Rate = 11 / 2 = 5.5%Normal Maturity time = 14…
Q: Consider a 6%, 15-year, semi-annual payment bond with a par value of $1000. Compute the current…
A: First we need to calculate bond price by using equation below. Bond price will the sum of present…
Q: can replace it now with a new machine that costs $21,100 but is much more efficient and will provide…
A: EAC means net annual cost of operating the machine. With the passage of time, the value of money…
Q: Consider the following three cash flow series: End of Year Cash Flow Series A Cash Flow Series B…
A: Net Present Value (NPV) is a financial metric used to evaluate the profitability of an investment or…
Q: 1. Your grandmother is giving you $100 a month for four years while you attend college to earn your…
A: Solution:-When an equal amount is saved each period at end of period, it is called ordinary…
Q: paying semiannual interest is reported as having an ask price of
A: A bond is a financial instrument issued in the debt market by large business firms and governments…
Q: You've just won the "I'm Feelin' Lucky Sweepstakes!! They offer two payout choices: 1) $500,000 now…
A: The time value of money refers to the core principle of finance which lays the foundation of valuing…
Q: Assume Evco, Inc., has a current stock price of $47.06 and will pay a $1.95 dividend in one year,…
A: Expected stock price is calculated by following formula:-Expected stock price =
Q: Wish You Were Here, Inc, currently does not pay a dividend but is expected to pay its first annual…
A: We need to use constant growth model to calculate stock value. The equation of constant growth model…
Q: Assume a $100,000 mortgage loan with 30-year term. The lender is charging an annual inte rate of 10%…
A: Mortgage loans are paid by the monthly payments that carry the payment for interest and payment for…
Q: Janelle Heinke, the owner of HaPeppast, is considering a new oven in which to bake the firm's…
A: Solution:Break-even point is the situation of new profit, no loss. It is the point where the total…
Q: Find the maturity value, discount period, discount, and proceeds for a promissory note that is…
A: The concept involved in this question is how trade invoices are prepared by firms to keep the…
Q: NPV $40,000 $20,000 $10,000 SO $50 $100 Cost of Goods Sold $150 The graph above shows the break-even…
A: NPV is a popular capital budgeting metric. NPV stands for Net Present Value. It is the sum of…
Q: Sales COGS Accounts Receivables Inventory 91, 500 80,000 30,000 15,000 Accounts Payables What is the…
A: Cash conversion cycle is the period required from begining to end to receive cash amount from…
Q: 6. Topic: Triangular Arbitrage Assume the following information: Value of Canadian dollar in U.S.…
A: Solution:Arbitrage means earning profit without investment and without taking risk.Triangular…
Q: Suppose a stock had an initial price of $76 per share, paid a dividend of $1.85 per share during the…
A: Percentage Total Return is calculated by following formula:-Percentage Total Return =
Q: Gabriel plans to retire when he has $1,500,000 in his bank account, and he does not want to work…
A: An annuity of a future value refers to a series of equal payments made at regular intervals,…
Q: I need answer typing clear urjent no chatgpt i will give upvote . Using an interest rate of 9%…
A: Present Value is current price of future value which is received at some specified period of time at…
Q: pts Jerrod Dean starts the month with a balance on his credit card of $1,110. On the 10th day of the…
A: The amount owed and the annual interest rate on the credit card are used to compute interest. The…
Q: ond is trading at 99.5 with 5.4 years left until maturity. Semi-annual coupon payments are 30.25 and…
A: Coupon rate is amount of interest payment that is paid on the bond each period and that is specific…
Q: Suppose on May 31, 2022, the DJIA opened at 33,264.59. The divisor at that time was 0.15290. In June…
A: An Index represents the cumulative position of the shares included in it and it is weighted average…
Q: Assume that a 10-year bond pays interest of $55 every six months and will mature for $1,000. Also…
A: Bonds are debt instruments issued by companies. The value of a bond today is the present value of…
Q: In 2020, Tesla stock (TSLA) soared an incredible 695%. Although 695% growth each year is very…
A: The time taken to compound a present value into a future value with a specific interest rate is…
Q: Fama's Llamas has a WACC of 8.95 percent. The company's cost of equity is 10.4 percent, and its…
A: WACC is the weighted average cost of capital which is total weighted cost of individual source of…
Q: Years: CFS: of 6.5%, what is the future value of the following cash flow stream? 0 2 F $0 a. $526.01…
A: SolutionI/YR = 6.5% 0 1…
Q: Barry's Steroids Company has $1,000 par value bonds outstanding at 16 percent interest. The bonds…
A: Coupon Bond:A coupon bond is a type of debt security that pays interest periodically in the form of…
Q: What annual interest rate is earned by a 20-week T-bill with a maturity value of $2,900 that sells…
A: The time value of money states that the money we have today has more worth than the money we are…
Q: 2 B 4 5 6 B E F SDJ, Inc., has net working capital of $2,710, current liabilities of $3,950, and…
A: Current ratio and quick ratio measure the liquidity of the firm. The formulas for these are:Current…
Q: Dave borrowed $730 on January 1, 2019. The bank charged him a $4.00 service charge and interest was…
A: When the borrower borrows a loan from the lender, he has to pay a rate of interest on the borrowed…
Q: 2–28 CAPITAL RATIONING: NPV APPROACH A firm with a 13% cost of capital must select the optimal group…
A: It is a case of capital rationing where a limited budget for investments is used to generate the…
Q: A contractor purchased a Caterpillar D-13 dozer for$100,000 and owned it for five years. The annual…
A: This is common equal uniform annual equivalent cost that is equivalent to all cost based on time…
Q: A project is expected to generate the following cash flows: $1 million in one year, $3.7 million in…
A: Cash flow = CFCash flow in year 1 = CF1= 1 millionCash flow in year 2 = CF2= 3.7 millionCash flow in…
Q: To motivate her staff, Maria runs a few different PV scenarios to show how their additional effort…
A: NPV is defined as the sum of the present values of all future cash inflows less the sum of the…
Q: Problem 10.17(calculation of g and EPS) Sidman Product's common stock currently sells for $41 a…
A: Earning per share refers to an income attributable to the outstanding shareholders after deducting…
Q: (Present-value comparison) You are offered $1.300 today, $6,000 in 10 years or $26.000 in 23 years.…
A: The present value is the discounted value of the future value of the investment.
Q: Which of the following bonds has the least reinvestment risk? A. A bond that has a higher coupon…
A: Reinvestment risk is the chance of not being able to reinvest the cash inflows occurring from the…
Q: tment will give you monthly payments of $1972.19 for 8 years. You will receive your first payment…
A: Present value is the equivalent value today of the future money that is going to be received in the…
Q: You are serving on a jury. A plaintiff is suing the city for injuries sustained after a freak street…
A: Time value of money refers to the concept of value of money which changes with the passage of time…
Q: A bank has three assets. It has $75 million invested in consumer loans with a three-year duration,…
A: The duration of the portfolio is the weighted sum product of each asset's duration in the portfolio.…
Q: A couple visits an open house and fall in love with the floor plan and location. host they would…
A: Monthly payment=1750Interest rate=r=5%Period=n=30years=360 monthsLoan amount=$249000Can the afford…
Q: Hi, what is How much principal remains to be paid after the first year? How much will remain…
A: Variables in the question:Loan =$100,000 N= 25 yearsRate=15.4%Monthly rate=1.2833333333%
Vinubhai
Don't upload image please
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
- The management of Kawneer North America is considering investing in a new facility and the following cash flows are expected to result from the investment: A. What is the payback period of this uneven cash flow? B. Does your answer change if year 10s cash inflow changes to $500,000?Blanda Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. If the firm uses a 7 percent discount rate for their production systems. Year System 1 System 2 0 -$12,800 -$42,700 1 12,800 32,300 2 12,800 32,300 3 12,800 32,300 What are the payback periods for production systems 1 and 2? (Round answers to 2 decimal places, e.g. 15.25.) Payback period of System 1 is years and Payback period of System 2 is years If the systems are mutually exclusive and the firm always chooses projects with the lowest payback period, in which system should the firm invest? The firm should invest in .system 1 system 2Blossom Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses a 7 percent discount rate for their production systems. Year System 1 System 2 0 -$12,000 -$42,000 1 12,000 30,000 2 12,000 30,000 3 12,000 30,000 What are the payback periods for production systems 1 and 2? (Round answers to 2 decimal places, e.g. 15.25.) Payback period of System 1 is ________yrs & payback period of System 2 is ________yrs. If the systems are mutually exclusive & the firm always chooses projects with the lowest payback period, in which system should the firm invest?__________
- Solo Corp. is evaluating a project with the following cash flows: Year Cash Flow 0. s29,200 11.400 14,100 16,000 13,100 2. 3. 4. 9,600 The company uses a discount rate of 13 percent and a reinvestment rate of 6 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate colculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) % a. Discounting approach MIRR b. Reinvestment approach MIRR % C. Combination approach MIRRSolo Corporation is evaluating a project with the following cash flows: Year Cash Flow -$ 0 12345 29,200 11,400 14,100 16,000 13,100 -9,600 The company uses an interest rate of 9 percent on all of its projects. Calculate the MIRR of the project using all three methods. a. MIRR using the discounting approach. Discounting approach MIRR b. MIRR using the reinvestment approach. Reinvestment approach MIRR 20.14% 19.76% 18.22% 18.60% Combination approach MIRR 15.47% 15.17% 13.99% 14.29% c. MIRR using the combination approach. 14.49% 14.21% 13.11% 13.39%Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow 0 -$ 29,300 11,500 12345 14,200 16,100 13,200 -9,700 The company uses a discount rate of 11 percent and a reinvestment rate of 8 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR % b. Reinvestment approach MIRR 14.18 % c. Combination approach MIRR 13.68 %
- Solo Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 –$ 28,300 1 10,500 2 13,200 3 15,100 4 12,200 5 – 8,700 The company uses a discount rate of 13 percent and a reinvestment rate of 6 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)ces Duo Corporation is evaluating a project with the following cash flows: Year 0 Cash Flow -$ 29,100 -2345 1 11,300 14,000 15,900 13,000 -9,500 The company uses a discount rate of 12 percent and a reinvestment rate of 7 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR b. Reinvestment approach MIRR % c. Combination approach MIRR %Duo Corporation is evaluating a project with the following cash flows: Cash Flow Year 0 WNIO 1 2 3 4 5 -$ 28,900 11,100 13,800 15,700 12,800 -9,300 The company uses a discount rate of 13 percent and a reinvestment rate of 6 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR b. Reinvestment approach MIRR c. Combination approach MIRR % % %
- Solo Corp, is evaluating a project with the following cash flows: Cash Flow -$28,200 10,400 Year 0 12440 3 5 13,100 15,000 12,100 8,600 The company uses a discount rate of 11 percent and a reinvestment rate of 8 percent on all of its projects. MIRR Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) %Al- Huda Company has two mutually Exclusive projects with the following cash flow streams and discount rates. In addition, the management has identified two years as its maximum acceptable payback period. Yar 0 Yer 1 Year 2 Yew 3 Year 4 Discant Project Cash Flaw Cash Flao Cash Flow Cash Flow Cash Flow Rate A -100 40 50 60 N/A 15 B -73 30 30 30 30 15 You have been asked to answer the following questions: 1. What is the NPV of each project? 2. What is the IRR of Each Project? 3. Is there a cross over point? if yes, what it is value? 4. What is the payback period? 5. What is your recommendation?Solo Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 29,500 1 11,700 2 14,400 3 16,300 4 13,400 5 9,900 The company uses a discount rate of 13 percent and a reinvestment rate of 6 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b.Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR b. Reinvestment approach MIRR C. Combination approach MIRR % % %