Take me to the textThe following table indicates the net cash flows of a capital asset:Year Net Cash Flow0$-13,9001$5,5002$9,600Do not enter dollar signs or commas in the input boxes.Use the negative sign where appropriate.Round the factor to 4 decimal places and the NPV to the nearest whole number.Assume the required rate of return is 13%. Determine the net present value of this asset.Year Net Cash Flow012Total$-13,900$5,500$9,600Factor Net Present ValueSA$A

A financial statistic known as net present value (NPV) determines the profitability of an investment…

Answered: The following table indicates the net…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following table indicates the net cash flows of a capital asset: Year Net Cash Flow 0 $-159,000 1 $59,000 2 $59,000 3 $59,000 4 $59,000 Do not enter dollar signs or commas in the input boxes. Round your answer to 2 decimal places. Calculate the cash payback period using the formula method. Payback: Answer years
Take me to the text The following table indicates the net cash flows of a capital asset: Year Net Cash Flow 0 $-12,900 1 $4,100 2 $8,100 Do not enter dollar signs or commas in the input boxes. Use the negative sign where appropriate. Round the factor to 4 decimal places and the NPV to the nearest whole number. Assume the required rate of return is 9%. Determine the net present value of this asset. Year Net Cash Flow Factor Net Present Value $-12,900 0 1 2 Total $4,100 $8,100 SA $ 69
Consider two assets with the following cash flow streams: Asset A generates $4 at t=1, $3 at t=2, and $10 at t=3. Asset B generates $2 at t=1, $X at t=2, and $10 at t=3. Suppose X=6 and the interest rate r is constant. For r=0.1, calculate the present value of the two assets. Determine the set of all interest rates {r} such that asset A is more valuable than asset Draw the present value of the assets as a function of the interest rate. Suppose r=0.2. Find the value X such that the present value of asset B is 12. Suppose the (one-period) interest rates are variable and given as follows: r01=0.1,r12=0.2, r23=0.3. Calculate the yield to maturity of asset A. (You can use Excel or ascientific calculator to find the solution numerically.)
Consider the following cash flows: Year Cash Flow 0 $32,500 123 13,300 18,400 10,700 What is the IRR of the cash flows? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Internal rate of return %
Consider two assets with the following cash flow streams:Asset A generates $4 at t=1, $3 at t=2, and $10at t=3. Asset B generates $2 at t=1, $X at t=2, and $10at t=3.Suppose X=6 and the interest rate r is constant. (a)For r=0.1, calculate the present value of the two assets. (b)Determine the set of all interest rates {r} such that asset A is more valuable than asset B. (c)Draw the present value of the assets as a function of the interest rate. (d)Suppose r=0.2.Find the value X such that the present value of asset B is 12. (e)Suppose the (one-period) interest rates are variable and given as follows: r01=0.1, r12=0.2, r23=0.3. Calculate the yield to maturity of asset A.
Average Rate of Return, Cash Payback Period, Net Present Value Method for a Service Company Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost of $176,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of $44,000. The company's minimum desired rate of return for net present value analysis is 12%. Present Value of an Annuity of $1 at Compound Interest 15% Year 6% 10% 12% 20% 1 0.943 0.909 0.893 0.870 0.833 1.736 2 1.833 1.690 1.626 1.528 2.673 2.283 2.487 2.402 2.106 4 3.465 3.170 3.037 2.855 2.589 3.605 3.353 5 4.212 3.791 2.991 3.785 4.917 4.355 4.111 3.326 3.605 7 5.582 4.868 4.564 4.160 6.210 4.968 4.487 3.837 8 5.335 6.802 5.759 5.328 4.772 4.031 6.145 5.650 5.019 10 7.360 4.192 Compute the following:
Consider two assets with the following cash flow streams: Asset A generates $4 at t=1, $3 at t=2, and $10 at t=3. Asset B generates $2 at t=1, $X at t=2, and $10 at t=3. Suppose X=6 and the interest rate r is constant. Suppose r=0.2. Find the value X such that the present value of asset B is 12. Suppose the (one-period) interest rates are variable and given as follows: r01=0.1,r12=0.2, r23=0.3. Calculate the yield to maturity of asset A. (You can use Excel or ascientific calculator to find the solution numerically.)
Consider the following cash flows: Year Cash Flow 0 1 2 3 $33,000 13,900 17,800 11,300 Required: What is the IRR of the above set of cash flows? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Internal rate of return
Consider the following cash flows: Cash Flow Year 0 -$ 33,500 1 14,500 2 17,200 3 11,900 What is the IRR of the cash flows? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Internal rate of return %
Average Rate of Return Method, Net Present Value Method, and Analysis for a service company The capital investment committee of Arches Landscaping Company is considering two capital investments. The estimated operating income and net cash flows from each investment are as follows: Front-End Loader Year 1 2 3 4 5 Total Year 1 2 3 4 5 6 7 Operating Income 8 9 10 $54,000 54,000 54,000 54,000 54,000 $270,000 0.943 Each project requires an investment of $600,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 10% for purposes of the net present value analysis. Present Value of $1 at Compound Interest 6% 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 10% Net Cash Flow 0.909 0.826 0.751 $172,000 172,000 172,000 172,000 172,000 $860,000 12% 0.893 0.797 0.756 0.712 0.658 0.683 0.636 0.572 0.621 0.567 0.497 0.564 0.507 0.513 0.467 0.424 0.386 0.452 0.404 15% 0.361 0.322 0.870 0.432 0.376 0.327 0.284 0.247 Operating Income…
Consider the following cash flows: Year Cash Flow 0 –$ 32,500 1 14,300 2 17,400 3 11,700 What is the IRR of the cash flows? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Consider the following cash flows: Year Cash Flow 0 −$28,300 1 15,400 2 13,500 3 9,900 a. What is the profitability index for the cash flows if the relevant discount rate is 9 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) b. What is the profitability index if the discount rate is 14 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) c. What is the profitability index if the discount rate is 25 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

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