The expected average rate of return for a proposed investment of $639,000 in a fixed asset, with a useful life of 4 years, straight-line depreciation, no residual value, and an expected total net income of $335,000 for the 4 years, is (round to two decimal points). Oa. 13.11% Ob. 52.43% Oc. 26.21% Od. 13.90%
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- 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%What is the internal rate of return for a project that has a net investment of $76,000 and net cash flows of $20,507 per year for 7 years? a. 18.2% b. 19% c. 16% d. 17%The following investment has a net present value of zero at i-8% per year. Which of the following is the net equivalent annual worth at 8% per year? Year Cash flow, S 0 1 2 3 4 5 6 Select one: O a.-134 O b.-402 O c.0.0 O d. 600 Oe. 850 -4,600 800 X x 8x 800 X
- Find the IRR for an investment that has an initial outlay of 25,000 and is expected to achieve 30,000 after 7 years. O a. 1.4% Ob. 2.6% O c. 3.1% Od. 4.8% O e. None of the above Next pageA $169,700 initial investment will generate the following present values of net cash flows. What is the break-even time for this investment? (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Round "Break-even time" answer to 1 decimal place. Year Initial investment 1. 2. 3. 4. 5. Break-even time Present Value of Net Cash Flows. $ (169,700) 51,818 47,105 37,888 38,931 35,391 Cumulative Present Value of Net Cash Flows $ (169,700) (117,882) (70,777) (32,889) years 6,042 41,433NOT GRADED Excess Present Value Index and Average Rate of ReturnHighpoint Company is evaluating five different capital expenditure proposals. The company's hurdle rate for net present value analyses is 12%. A 10% salvage value is expected from each of the investments. Information on the five proposals is as follows: Proposal Required Investment PV at 12% of After-Tax Cash Flows Avg. Annual Net Income from Investment A $265,000 $305,030 $37,400 B 195,000 231,780 26,000 C 155,000 168,040 19,200 D 175,000 211,300 27,600 E 123,000 131,990 14,960 a. Compute the excess present value index for each of the five proposals.Round answers to three decimal places. Proposal Excess PV Index A Answer B Answer C Answer D Answer E Answer b. Compute the average rate of return for each of the five proposals.Round answers to one decimal place. For example, 0.4567 equals 45.7% Proposal Avg. Rate of Return A Answer B Answer C…
- Question 1- A $12,000 investment will return annual benefit for six yearswith no salvage value at the end of six years. Assumestraight line depreciation and a 46% tax rate and the inflationrate is 5%. What is the inflation free after tax rate ofreturn on the investment if the annual benefits are $2,918 intoday’s dollars? a. 10.18% b. 4.94% c. 5% d. 8.20%What is the best alternative using incremental Analysis? А C ... Capital investment $ 2,000 7,000 4,200 Annual revenues 3,200 8,000 6,000 Annual costs 2,100 5,100 4,000 Market value at the end of useful life 100 600 420 Useful life (in years) 10 10 10 The correct ranking of Alternative is Blank 1 Select Alternative Blank 2You are given the following data for a project that is to be evaluated using the APV method. Year EBIT CAPEX 0 O $201.765 O $193,822 O $185,617 O $222,872 O $213,918 1 $127.000 $60,000 2 Depreciation Increase in NWC Year-end net debt $80,000 Cost of net debt = 8% Unlevered cost of capital = 11.8% Corporate tax rate = 30% Calculate the total value of the project at t = 0. using the APV method. $72,000 $50,000 $100,000 $133,000 $40,000 $80,000 $60,000 $140,000 3 $138.500 $10,000 $84,000 $30,000 $140,000
- Tiberius Manufacturing is considering two alternative investment proposals with the following data: Proposal X Proposal Y $10,500,000 Investment $500,000 Useful life Estimated annual net cash inflows for 5 years Residual value 5 years $2,100,000 5 years $105,000 $32.000 $52.000 Depreciation method Required rate of return Straight-line Straight-line 13% 12% Calculate the accounting rate of return for Proposal Y. (Round any intermediate calculations and your final answer to two decimal places.) A. 12.63% B. 9,52% C. 13.87% D. 4.29%A proposed project is estimated to have the following cash, at 9% MARR 0 $900 1 $800 a. Using 7% interest rate, indicate the NPV of the investment. b. At 20%, indicate the NPV of the investment. 2 $700 3 $600 c. What is the IRR for this investment? Write answer in percentage value, up to 2 decimal places. 4 $500 $1500 $1500 $1500 $1500 5 6 7 8Okta company provides the following information pertaining to its proposed projects. Project Investment Required Net Present Value Life of the project (years) Internal Rate of Return A $850,000 $269,640 7 19% В $745,000 $277,100 12 17% For the purpose of calculating NPV, the discount rate is 10%. Determine profitability Index for Project A and Project B. a. Profitability Index for project A is $0.40 and Project B is 0.37 b. Profitability Index for project A is $0.32 and Project B is 0.19 c. Profitability Index for project A is $0.32 and Project B is 0.37 d. Profitability Index for project A is $0.37 and Project B is 0.32