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- 6. A company will invest $37,072 on a capital expenditure (an asset with multi-year use). They estimate it will save $25,166 per year for the next 2 years. If their TVOM is 5.89%, what is the worth of the investment per year? (be sure to include the sign)Given the initial investment in a factory processing equipment as Ghc500,037. Let the opportunity cost of capital for the industry be 10% p.a. Assuming that the equipment is capable of generating an after-tax returns of Ghc115,000 for the first 5 years and Ghc65000 for the 6 year and Ghe53400 for the 7th year. a. Find the Net Present Value (NPV) b. Detemine the Internal Rate of Return c. Identify three ways in which the Net Present value is superior to the Internal Rate of return as investment criteriaGiven the initial investment in a factory processing equipment as Ghc500,037. Let the opportunity cost of capital for the industry be 10% p.a. Assuming that the equipment is capable of generating an after-tax returns of Ghc115,000 for the first 5 years and Ghc65000 for the 6th year and Ghc53400 for the 7th year. Find the Net Present Value (NPV) Determine the Internal Rate of Return Identify three ways in which the Net Present value is superior to the Internal Rate of return as investment criteria
- 4. What is the internal rate of return for a project that has a net investment of $14,600 (Time 0 outflow) and a single net cash flow of $25,750 in 6 years? Use excel formulaHow does the net working capital affect the NPV of a 5-year project if working capital is expected to increase by $25,000 in to (and decrease in t5 again by the same amount) and the firm has a 15% cost of capital?2. A firm plans to buy an asset for $100,000 and will completely depreciate the asset on a straight- line basis over two years. Operating cash flow from this asset will be $60,000 in each of the next two years. The cost of capital is 8%. a. What is the investment's NPV? b. What is the economic value-added (EVA) cash flow in years one and two? c. What is the project's EVA over its life? d. How do your answers to (a) and (c) compare?
- 4. A project capitalized for ₱150,000 invested in depreciable assets will earn a uniform, annual income of ₱59, 547 in 10 years. The costs for operation and maintenance total ₱27,000a year, and taxes and insurance will cost 4% of the first cost each year. If the company expects its capital to earn12% before income taxes, is the investment worthwhile? Show by: Rate of return Solve and show the solution.Assume a firm takes on a project that requires an initial investment in year 0 of $42,000. assume that the project creates a NOPAT of $4,900 in year 1. If the weighted average cost of capital for this project is 10% what's the EVA for this project for year 1?If An investment costs $23,958 and will generate cash flow of $6,000 annually for five years. The firm's cost of capital is 10 percent? a. What is the investment's internal rate return? Based on the net present rate return, should the firm makeinvestment? b.What is the investment's net present value? Based on the net present value, should the firm make the investment?
- 6. A machine shop will require a fixed capital investment of ₱12,000,000andan estimated working capital of ₱2,250,000. Upon evaluation, the annual depreciation is estimated to be 9% of the fixed capital investment. If annual profit is ₱3,000,000, what is the rate of return on the total investment? Solve and show the solution.A company wants to invest $619,932 today. The expected returns in years 1, 2, and 3 are $244,539, $175,421, and $341,884, respectively. If the rate of return on investment must be at least 15%, and the probability of commercial and technical success are 0.89 and 0.86, respectively. What is the maximum expenditure justified that the company may spend?You are looking at an investment which has an initial cost of $400,000 and a salvage value of zero after five years. What is the average accounting return for this investment given the following annual net incomes: year 1 $100,000, year 2 150,000, year 3 150,000, year 4 100,000 and year 5 50,000. a. 27.5%b. 52.5%c. 55.0%d. 137.5%