horse Corp. management is planning to spend $650,000 on a new marketing campaign. They believe that this acti ional cash flows of $323,000 each year for three years. If the discount rate is 17.5 percent, what is the NPV on thi Eive amounts using negative sign e.g. -45.25. Do not round discount factors. Round other intermediate calculations and fin nal places, e.g. 1,525.) NPV is %$4

horse Corp. management is planning to spend $650,000 on a new marketing campaign. They believe that this acti ional cash flows of $323,000 each year for three years. If the discount rate is 17.5 percent, what is the NPV on thi Eive amounts using negative sign e.g. -45.25. Do not round discount factors. Round other intermediate calculations and fin nal places, e.g. 1,525.) NPV is %$4

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Ledesma Corp. developed a product that will provide zero cash flow at the end of Years 1 and 2, and a cash inflow of $250,000 per year forever, beginning at the end of Year 3. At a discount rate of 18%, what is the present value of the product? $1,288,889 $4845,321 $ 543,568 ion $997, 478 $1.177.024
Flextire Manufacturing is considering two mutually exclusive proposals. Each will cost $80,000 and will last 6 years. Cash flows and estimated probabilities are presented below. Based on an MARR of 10%, use decision tree analysis to determine which proposal Flextire should consider. Proposal A Proposal B Benefits per year Benefits per year Probability $18,000 $17,500 Conservative= 0.40 20,000 20,500 Most likely= 0.35 23,000 23,000 Optimistic= 0.25 Write a brief interpretation of your answer.
Two mutually exclusive alternatives are being considered. The MARR is 15% per year. General inflation is 5.5%/year. Based on the data below, performan appropriate analysis to select the most economical alternative. State your assumptions.
Imagineering, Inc., is considering an investment in CAD-CAM compatible design software with the cash flow profile shown in the table below. Imagineering’s MARR is 18 %/year.What is the present worth of this investment (in millions)? $enter a dollar amount Carry all interim calculations to 2 decimal places and round your answer to the nearest million. The tolerance is ±0.05. EOY 0 1 2 3 4 5 6 7 Cash Flows (M$) $12 $1 $5 $2 $5 $5 $2 $5
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Masego Pty Ltd considers buying a Truck as the business expands. They are considering between buying Truck Y or Truck Z. They will be spending P140 000 on Truck Y and P160 000 on Truck Z. The discounting factor for the above trucks is 16%. The cash inflows and outflows are shown below: Truck Y Truck Z Net cash flow Net cash flow Year 0 (140000) (160000) 1 50000 85000 2 60000 90000 3 50000 75000 4 40000 65000 a) Calculate the payback period for each truck. Explain which truck the business should buy and why. b) Calculate the discounted payback for each truck. c) Determine the Net Present Value for each truck. d) Calculate the profitability index for each truck. e) Describe five advantages of the NPV method of capital budgeting.
XYZ Corporation has annual cash demand of P3,000,000 for a fund set aside for operating expenses. The cost to transfer funds into this account is P500 each time. If cash was not placed into this fund, it would have earned 4% annually. Its current policy is to transfer P125,000 every 15 days. What is the increase /(decrease) in income if the Optimum Cash Balance model was applied to this account?
BOYDZ Condiments is a spice-making firm. Recently, it developed a new process for producing spices. The process requires new machinery that would cost $1,618,338, have a life of five years, and would produce the cash flows shown in the following table. Year Cash Flow 1 $442,372 2 -254,300 3 779,920 4 998,420 5 591,480 What is the NPV if the discount rate is 16 percent? (Enter negative amounts using negative sign e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to 0 decimal places, e.g. 1,525.) NPV is $_______
A company is planning to expand its business is costing OMR 19252. The following cash inflows are expected. Calculate Profitability index given the rate of discounting to be 3.008% Years Machine A 1 12396 2 13300 3 12500 14500
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