Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 5% return from its investments. Initial investment Net cash flows in: Year 1 Year 2 Year 3 Project X1 Project X2 IRR Project X1 $ (102,000) % % 36,000 46,500 71,500 Compute the internal rate of return for each of the projects using Excel functions. Based on internal rate of return, indicate whether each project is acceptable. Note: Round your answers to 2 decimal places. Project X2 $ (164,000) Acceptable? 76,500 66,500 56,500

Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 5% return from its investments. Initial investment Net cash flows in: Year 1 Year 2 Year 3 Project X1 Project X2 IRR Project X1 $ (102,000) % % 36,000 46,500 71,500 Compute the internal rate of return for each of the projects using Excel functions. Based on internal rate of return, indicate whether each project is acceptable. Note: Round your answers to 2 decimal places. Project X2 $ (164,000) Acceptable? 76,500 66,500 56,500

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 8TP: Fenton, Inc., has established a new strategic plan that calls for new capital investment. The...

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Fenton, Inc., has established a new strategic plan that calls for new capital investment. The company has a 9.8% required rate of return and an 8.3% cost of capital. Fenton currently has a return of 10% on its other investments. The proposed new investments have equal annual cash inflows expected. Management used a screening procedure of calculating a payback period for potential investments and annual cash flows, and the IRR for the 7 possible investments are displayed in image. Each investment has a 6-year expected useful life and no salvage value. A. Identify which project(s) is/are unacceptable and briefly state the conceptual justification as to why each of your choices is unacceptable. B. Assume Fenton has $330,000 available to spend. Which remaining projects should Fenton invest in and in what order? C. If Fenton was not limited to a spending amount, should they invest in all of the projects given the company is evaluated using return on investment?
Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 5% return from its investments. Initial investment Net cash flows in: Year 1 Year 2 Year 3 Project X2 Project X1 $ (112,000) $ (184,000) 41,000 84,000 51,500 76,500 74,000 64,000 Compute the internal rate of return for each of the projects using Excel functions. Based on internal rate of return, indicate whether each project is acceptable. Note: Round your answers to 2 decimal places. Project X1 Project X2 IRR Acceptable? % Yes % Yes
Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 6% return from its investments. Project X1 Project X2 Initial investment $ (114,000) $ (188,000) Net cash flows in: Year 1 42,000 85,500 Year 2 52,500 75,500 Year 3 77,500 65,500 Compute the internal rate of return for each of the projects using Excel functions. Based on internal rate of return, indicate whether each project is acceptable. Note: Round your answers to 2 decimal places.
Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 5% return from its investments. Project X1 Project X2 Initial investment $ (112,000) $ (184,000) Net cash flows in: Year 1 41,000 84,000 Year 2 51,500 74,000 Year 3 76,500 64,000 Compute the internal rate of return for each of the projects using Excel functions. Based on internal rate of return, indicate whether each project is acceptable. (Round your answers to 2 decimal places.)
Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 4% return from its investments. Project X1 Project X2 Initial investment $ (120,000) $ (200,000) Net cash flows in: Year 1 45,000 90, 000 Year 2 55,500 80,000 Year 3 80,500 70,000 Compute the internal rate of return for each of the projects using Excel functions. Based on internal rate of return, indicate whether each project is acceptable.
Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 7% return from its investments (PV of $1. EV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided.) Initial investment Net cash flows in: Year 1 Year 2 Year 3 Required A Required B Project X1 Year 11 Year 2 Year 3 a. Compute each project's net present value. b. Compute each project's profitability index. c. If the company can choose only one project, which should it choose on the basis of profitability index? Totals Initial investment Net present value Complete this question by entering your answers in the tabs below. Project X2 Year 1 Year 2 Year 3 Totais Initial investment S Project X1 $ (116,000) Compute each project's net present value. (Round your final answers to the nearest dollar) Net Cash Flows Present Value of Net Cash Flows S 43,000 53,500 78,500 Required C O 0 Present Value of 1 at 7% Project X2 $ (192,000) $ 87,000 77,000…
Following Is Information on two alternative Investments belng considered by Tiger Co. The company requires a 4% return from Its Investments. Project X1 $(100,000) Project X2 $(160,800) Initial investment Expected net cash flows in: Year 1 35,000 45,500 70,500 75,000 65, 000 55,000 Year 2 Year 3 Compute the Internal rate of return for each of the projects using Excel functlons. Based on Internal rate of return, Indicate whether each project Is acceptable. (Round your answers to 2 declmal places.) IRR Acceptable? Project X1 Project X2 Mc Graw Hill Lducation Type here to search *+ F10 F11 AI F2 F7 F8 F9 F3 F4 F5 F6 F1 & 23 4 5 7 T G H. V N M C * 0O B
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