Required informationProblem 24-2A (Algo) Payback period, accounting rate of return, net present value, and net cash flowcalculation LO P1, P2, P3[The following information applies to the questions displayed below)Project Y requires a $316,500 investment for new machinery with a six-year life and no salvage value. The project yieldsthe following annual results Cash flows occur evenly within each year of $1. EV of $1 PVA of end EVA of Useappropriate factor(s) from the tables provided.)Sales of now productЕкрепкоDepreciation MachineryProjectProblem 24-2A (Algo) Part 33. Compute Project Y's accounting rete of retum$137,35Age of

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EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 21P

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Required information [The following information applies to the questions displayed below.] Project Y requires a $331,500 investment for new machinery with a five-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1. EV of $1. PVA of $1. and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Annual Amounts Sales of new product Expenses Project Y Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income 3. Compute Project Y's accounting rate of return. Numerator: Accounting Rate of Return Denominator: Project Y $ 400,000 179,200 66,300 29,000 $ 125,500 Accounting Rate of Return
Required Information [The following information applies to the questions displayed below.] Project Y requires a $327,000 investment for new machinery with a four-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Project Y $ 360,000 161,280 81,750 26,000 $ 90,970 2. Determine Project Y's payback period. Project Y Payback Period Numerator: 1 Denominator: 1 Payback Period = 0
Required information [The following information applies to the questions displayed below.] Project Y requires a $315,000 investment for new machinery with a five-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Project Y $ 365,000 163,520 63,000 26,000 $ 112,480 3. Compute Project Y's accounting rate of return. Numerator: Annual income Project Y $ Accounting Rate of Return Denominator: / Average investment 112,480 = Accounting Rate of Return 0
Compute the NPV based on the following data Life of project 10.00 year Required Investment 500,000.00 Required Rate of Return 8% Required Working Capital to be released at the end of the project 35,000.00 Salvage value of equipment at end of year 10 12,000.00 Required overhaul in year 5 60,000.00 Annual increase in net income for this project 85,000.00 Year Cash flow 0 1 2 3 4 5 6 7 8 9 10 Net Present Value IRR Should we accept this project:?
Required information A company that manufactures magnetic flow meters expects to undertake a project that will have the cash flows estimated. First cost, $. Equipment replacement cost in year 2, $ Annual operating cost, $/year Salvage value, $ Life, years -870,000 -300,000 -920,000 250,000 4 At an interest rate of 10% per year, what is the equivalent annual cost of the project? Find the AW value using tabulated factors. The equivalent annual cost of the project is $-1
Required information. [The following information applies to the questions displayed below.] Project Y requires a $331,500 investment for new machinery with a five-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1. and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation). Depreciation Machinery Selling, general, and administrative expenses Income Years 1-5 4. Determine Project Y's net present value using 9% as the discount rate. Note: Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar. Net present value Not Cash Flows Project Y $ 400,000 Present Value of Annuity at 9% 179,200 66,300 29,000 $ 125,500 Present Value of Net Cash Flows
Investment required Present value of cash inflows - Net present value Life of the project. Internal rate of return 1 Required 1 $ (270,000) 336,140 $ 66,140 Project 6 years 18% Complete this question by entering your answers in the tabs below. Required 2 Compute the profitability index for each investment project. Note: Round your answers to 2 decimal places. Profitability Index 2 $ (450,000) 522,970 $ 72,970 Project Number 3 years 19% The net present values above have been computed using a 10% discount rate. Limited funds are available for investment, so the company can't accept all of the available projects. Required: 1. Compute the profitability index for each investment project. 2. Rank the four projects according to preference, in terms of net present value, profitability index, and internal rate of return. 3 $ (360,000) 433,400 $ 73,400 12 years. 14 $ (480,000) 567,270 $ 87,270 6 years 16%
Tiberius Manufacturing is considering two alternative investment proposals with the following data: Proposal X Investment $10,800,000 Useful life. Estimated annual net cash inflows for 5 years 5 years $2,160,000 Residual value $60,000 Depreciation method Straight-line Required rate of return 14% Calculate the accounting rate of return for Proposal Y. (Round any intermediate calculations and your final answer to two decimal places.) OA. 13.90% OB. 11.56% OC. 17.83% OD. 7.58% Proposal Y $440,000 5 years $99,000 $35,000 Straight-line 13%
[The following information applies to the questions displayed belad Project Y requires a $321,000 investment for new machinery wityy vifour-year life and no salvage value. The project yield owing annual results. Cash flows occur evenly withit veach year. ( Annual Asounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Incone 2. Determine Project Y's payback period Project Y Project Y Numerator: Initial investment $ 3. Compute Project Y's accounting rate of return Not present value Payback Period T Denominator: 7 Annual net cash flow Numerator 321,000 $ 180,000 Accounting Rate of Return Denominator Net Cash Flows Present Value of Annuity at a Project Y $ 375,000 80,250 4. Determine Project Y's net present value using 7% as the discount rate. (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar) S $ 99,750…
Show Attempt History Current Attempt in Progress Your answer is partially correct. Compute the IRR for the following project cash flows: a. An initial outlay of $3,234,257 followed by annual cash flows of $423,990 for the next eight years. (Round final answer to 2 decimal places, e.g. 15.25%.) IRR of the project is 1 %. b. An initial investment of $26,801 followed by annual cash flows of $7,070 for the next five years. (Round final answer to 2 decimal places, e.g. 15.25%.) IRR of the project is 10 % c. An initial outlay of $8,746 followed by annual cash flows of $1,880 for the next seven years. (Round final answer to 2 decimal places, e.g. 15.25%.) IRR of the project is eTextbook and Media 12.94 % Save for Later Using multiple attempts will impact your score. 20% score reduction after attempt 2 Q Search L Attempts: 2 of 3 used Submit Answer
Net cash flow and timeline depiction For each of the following projects, determine the net cash flows, and depict the cash flows on a time line. a. A project that requires an initial investment of $123,000 and will generate annual operating cash inflows of $22,000 for the next 18 years. In each of the 18 years, maintenance of the project will require a $4,800 cash outflow. b. A new machine with an installed cost of $87,000. Sale of the old machine will yield $31,000 after taxes. Operating cash inflows generated by the replacement will exceed the operating cash inflows of the old machine by $22,000 in each year of a 6-year period. At the end of year 6, liquidation of the new machine will yield $17,000 after taxes, which is $10,000 greater than the after-tax proceeds expected from the old machine had it been retained and liquidated at the end of year 6. c. An asset that requires an initial investment of $3 million and will yield annual operating cash inflows of $293,000 for…
! Required information [The following information applies to the questions displayed below.] Project Y requires a $331,500 investment for new machinery with a five-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1, EV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Project Y $ 400,000 179,200 66,300 29,000 $ 125,500 3. Compute Project Y's accounting rate of return. Project Y Accounting Rate of Return Denominator: Numerator: / Accounting Rate of Return 0

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