Cullumber Industries management is planning to replace some existing machinery in its plant. The cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses an 18 percent discount rate for projects like this. Year 0 1 2 3 4 5 Cash Flow -$3,505,700 831,310 1,013,300 1,233,700 1,283,660 1,512,800 What is the NPV of this project? (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g.

ealthy Food Ltd is considering to invest in one of the two following projects to buy new machinery. Each option will last 5 years and have no salvage value at the end. The company’s required rate of return for all investment projects is 7%. The cash flows of the projects are provided below.     Machinery 1 Machinery 2 Cost $396,000 $415,000 Future Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5   123,000 194,000 205,000 215,000 228,000   196, 000 204,000 212,000 217,000 233,000   Required: Identify which option of machinery should the company accept based on the simple payback period method if the firm maintains a policy that every investment project should recover the initial investment within 2 years.

Keone Products Company is considering an investment in one of two new product lines. The investment required for either product line is $750,000. The net cash flows associated with each product are as follows: Year Liquid Soap Body Lotion 1 $140,000 $ 125,000 2 150,000 125,000 3 160,000 125,000 4 150,000 125,000 5 150,000 125,000 6 100,000 125,000 7 80,000 125,000 8 70,000 125,000 Total $1,000,000 $1,000,000 a.  Recommend a product offering to Keone Products Company, based on the cash payback period for each product line.   Line Item Description Year Payback period for liquid soap   Payback period for body lotion   b.  The project with the     net cash flows in the early years of the project life will be favored over the one with the     net cash flows in the initial years..

Salsa Company is considering an investment in technology to improve its operations. The investment costs $241,000 and will yield the following net cash flows. Management requires a 10% return on investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Year Net cash Flow 1 $ 48, 200 2 53,900 3 76, 400 4 95,500 5 126,500 Required: Determine the payback period for this investment. Determine the break - even time for this investment. Determine the net present value for this investment. Should management invest in this project based on net present value?