Machines A and B are mutually exclusive and are expected to produce the following real cash flows: Cash Flows ($thousands) Co -110 -80 Machine A B G₁ +120 +90 C₂ +131 +80 Required A Required B The real opportunity cost of capital is 10%. a. Calculate the NPV of each machine. b. Calculate the equivalent annual cash flow from each machine. c. Which machine should you buy? C3 Complete this question by entering your answers in the tabs below. Required C +70 Calculate the MDV of oach maching

Machines A and B are mutually exclusive and are expected to produce the following real cash flows: Cash Flows ($thousands) Co -110 -80 Machine A B G₁ +120 +90 C₂ +131 +80 Required A Required B The real opportunity cost of capital is 10%. a. Calculate the NPV of each machine. b. Calculate the equivalent annual cash flow from each machine. c. Which machine should you buy? C3 Complete this question by entering your answers in the tabs below. Required C +70 Calculate the MDV of oach maching

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 4EA: Assume a company is going to make an investment of $450,000 in a machine and the following are the...

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Machines A and B are mutually exclusive and are expected to produce the following real cash flows: Cash Flows ($ thousands) Machine C0 C1 C2 C3 A −105 +115 +126 B −125 +115 +126 +138 The real opportunity cost of capital is 10%.a. Calculate the NPV of each machine. (Enter your answers in dollars not in thousands. Round your answers to the nearest whole dollar amount.) b. Calculate the equivalent annual cash flow from each machine. (Enter your answers in dollars not in thousands. Round your answers to the nearest whole dollar amount.) c. Which machine should you buy?multiple choice Machine A Machine B
Machines A and B are mutually exclusive and are expected to produce the following real cash flows: Machine A B Cash Flows ($ thousands) Co -114 C₁ C3 +124 +135 -76 +98 +76 +74 The real opportunity cost of capital is 8%. a. Calculate the NPV of each machine. b. Calculate the equivalent annual cash flow from each machine. c. Which machine should you buy?
Assume a company is going to make an investment of $450,000 in a machine and the following are the cash flows that two different products would bring in years one through four. Which of the two options would you choose based on the payback method?
Assume a company is going to make an investment in a machine of $825,000 and the following are the cash flows that two different products would bring. Which of the two options would you choose based on the payback method?
NPV profile of a project. Given the following cash flow of Project L-2, draw the NPV profile. Hint. Be sure to use a discount rate of zero for one intercept (y-axis) and solve for the IRR for the other intercept ( x-axis). (Click on the following icon ◻ in order to copy its contents into a spreadsheet.) Year 0=-$300,000 Year 1=$50,000 Year 2=$79,000 Year 3=$118,000 Year 4=$130,000 What is the NPV of Project L-2 where zero is the discount rate? $ (Round to the nearest dollar.) What is the IRR of Project L-2? % (Round to two decimal places.) Which of the graphs below best fits the NPV profile of the project? Click on the magnifying glass icon to see an enlarged version of each graph. (Select the best response.) B. D.
Consider the following cash flows: Co -$29 C₁ +$ 25 C₂ +$ 25 C3 +$ 25 C4 -$48 a. Which two of the following rates are the IRRs of this project? Note: You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answers and double click the box with the question mark to empty the box for a wrong answers. Any boxes left with a question mark will be automatically graded as incorrect. 2.5% 7.1% 14.3% 26.4% 40.0% b., c., and d. What is project NPV if the discount rates are 5%, 17%, and 34%? Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answers to 3 decimal places. b. Discount Rate NPV 5%
Consider an investment where the cash flows are: – $946.21 at time t = 0 (negative since this is your initial investment) $377 at time t = 1 in years $204 at time t = 2 in years $499 at time t = 3 in years (a) Use Excel's "Solver" to find the internal rate of return (IRR) of this investment. Take a screen shot showing Solver open with your entries for the function clearly visible. Paste the screen shot into an application (like Paint), and save it as a (.png) file. Upload your screenshot below. (b) What is the value of IRR found by Solver?
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Consider the decision to purchase one of the two machines X or Y, which cost M100 000 and M150 000, respectively, The net cash inflows expected from these two machines are shown in Table 6.1 below Year Machine X Machine Y 10 000 50 000 15 000 50 000 20 000 50 000 4 25 000 50 000 30 000 50 000 40 000 50 000 7 45 000 40 000 Your Task; i) Calculate the PayBack Period (PBP) of machines X and Y ii) Calculate the Return on Investment (ROI) of each machine i) Which machine would you recommend on the basis of the PBP and the ROI and why? 2. 3. 6.
4. You have the expected cash flows for this machine as follows: Initial cost ($12,000), cash flow year 1 $5,000, year 2 $4,000, year 3, $ 6,000, year 4 $2,000. The required rate of return is 13%. The NPV is