The management of Revco Products is exploring four different Investment opportunitles. Information on the four projects under study follows: Project Number 2 4 Investment required Present value of cash inflowS $(270,e00) 336,140 S(450, 000) 522,970 S(360, eee) 433,400 $ 73,400 $(480, 000) 567, 270 $ 87,270 Net present value $ 66,140 $ 72,970 Life of the project Internal rate of return 6 уеars 18% з уеars 19% 12 years 14% 6 уears 16% The net present values above have been computed using a 10% discount rate. Limited funds are avallable for Investment, so the company can't accept all of the avallable projects. Requlred: 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the profitability index for each investment project. (Round your answers to 2 decimal places.) Profitability Project Index 1 2 3 4 < Required 1 Required 2 >

The management of Revco Products is exploring four different Investment opportunitles. Information on the four projects under study follows: Project Number 2 4 Investment required Present value of cash inflowS $(270,e00) 336,140 S(450, 000) 522,970 S(360, eee) 433,400 $ 73,400 $(480, 000) 567, 270 $ 87,270 Net present value $ 66,140 $ 72,970 Life of the project Internal rate of return 6 уеars 18% з уеars 19% 12 years 14% 6 уears 16% The net present values above have been computed using a 10% discount rate. Limited funds are avallable for Investment, so the company can't accept all of the avallable projects. Requlred: 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the profitability index for each investment project. (Round your answers to 2 decimal places.) Profitability Project Index 1 2 3 4 < Required 1 Required 2 >

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 7PA: There are two projects under consideration by the Rainbow factory. Each of the projects will require...

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There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows: Use the information from the previous exercise to calculate the internal rate of return on both projects and make a recommendation on which one to accept. For further instructions on internal rate of return in Excel, see Appendix C.
The management of Riker Inc. is exploring five different investment opportunities. Information on the five projects under study follows: Project Number 1 2 3 4 5 Investment required $ (310,000 ) $ (270,000 ) $ (390,000 ) $ (480,000 ) $ (330,000 ) Present value of cash inflows at a 10%discount rate 394,630 340,260 482,970 570,930 278,850 Net present value $ 84,630 $ 70,260 $ (92,970 ) $ 90,930 $ 51,150 Life of the project 6 years 3 years 5 years 12 years 6 years The company’s required rate of return is 10%; thus, a 10% discount rate has been used in the preceding present value computations. Limited funds are available for investment, and so the company cannot accept all of the available projects. Required: 1. Compute the profitability index for each investment project. (Round your answers to 2 decimal places.) 2. Rank the five projects according to…
The management of Revco Products is exploring four different investment opportunities. Information on the four projects under study follows: Project Number 1 2 3 4 Investment required $ (270,000) $ (450,000) S (360,000) $ (480,000) Present value of cash inflows 336, 140 522,970 433, 400 567, 270 Net present value $ 66, 140 $ 72,970 $ 73,400 $ 87,270 Life of the project 6 years 3 years 12 years 6 years Internal rate of return 18% 19% 14% 16% 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: Compute the profitability index for each investment project. Rank the four projects according to preference, in terms of net present value, profitability index, and internal rate of return.
The management of Revco Products is exploring four different investment opportunities. Information on the four projects under study follows: Project Number 1 2 3 4 Investment required $ (270,000) $ (450,000) $ (360,000) $ (480,000) Present value of cash inflows 336,140 522,970 433,400 567,270 Net present value $ 66,140 $ 72,970 $ 73,400 $ 87,270 Life of the project 6 years 3 years 12 years 6 years Internal rate of return 18% 19% 14% 16% 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: I need help finding the profitability index for each investment project. Rank the four projects according to preference, in terms of net present value, profitability index, and internal rate of return.
The management of Revco Products is exploring four different investment opportunities. Information onthe four projects under study follows:Project Number1 2 3 4Investment required ....................... $(270,000) $(450,000) $(360,000) $(480,000)Present value of cashinfl ows at a 10%discount rate .............................. 336,140 522,970 433,400 567,270Net present value .......................... $ 66,140 $ 72,970 $ 73,400 $ 87,270Life of the project ........................... 6 years 3 years 12 years 6 yearsInternal rate of return ..................... 18% 19% 14% 16%The company’s required rate of return is 10%; thus, a 10% discount rate has been used in the present valuecomputations above. Limited funds are available for investment, so the company can’t accept all of theavailable projects.Required:1. Compute the project profitability index for each investment project.2. Rank the four projects according to preference, in terms of:a. Net present valueb. Project profitability…
Carmen, Inc. is considering three different independent investment opportunities. The present value of future cash flows, initial investment, net present value, and profitability index for each of the projects are as follows: Project A Project B Project C Present value of future cash flows $450,100 $313,100 $405,000 Initial investment 200,000 155,000 190, еее Net present value $250, 100 $158,100 $215,000 Profitability index 2.25 2.02 2.13 In what order should Carmen prioritize investment in the projects? Multiple Cholce С, В, А O A, B, C А, С, В C, A, B
Cummings Products Company is considering two mutually exclusive investments whose expected net cash flows are as follows: Expected Net Cash Flows Year Project A Project B 0 -$340 -$630 1 -528 210 2 -219 210 3 -150 210 4 1,100 210 5 820 210 6 990 210 7 -325 210 Select the correct graph for NPV profiles for Projects A and B. The correct graph is . What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: % Calculate the two projects' NPVs, if each project's cost of capital was 11%. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ Which project, if either, should be selected? should be selected. Calculate the two projects' NPVs, if each project's cost of capital was 18%. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B:…
Cooper Electronics uses NPV profiles to visually evaluate competing projects. Key data for the two projects under consideration are given in the following table: Initial investment 28,000 24,000Year Operating cash inflows 1 8,000 7,0002 12,000 10,0003 10,000 7,0004 9,000 7,000 Terra Firma Initial Investment $28000 $24000 Year Cash Flows 1 $8000 $7000 2 $12000 $10000 3 $10000 $7000 4 $9000 $7000 Using these data, graph, on the same set of axes, the NPV profiles for each project using discount rates of 0%, 8%, and the IRR. The IRR of project Terra is 14.57% (Round to two decimal places.) The IRR of project Firma is 11.3%. (Round to two decimal places.) If the discount rate is 0%, the NPV of project Terra is $11000 (Round to the nearest cent.) If the discount rate is 0%, the NPV of project Firma is $7000. (Round to the nearest cent.) If the discount rate is 8%, the NPV of project Terra is $4249.06.(Round to the…
Evaluate the following investment project according to the Discounted Payback Period (DPP) and QUESTION 3. NPV, and advise the management whether it should be accepted or rejected. The weighted average cost of capital (WACC) of the firm is 21%. YEAR CASH OUTFLOWS 100.000 1 100.000 YEAR CASH INFLOWS 70.000 80.000 100.000 150.000 200.000 50.000 Salvage Value 1234 5
The management of Winstead Corporation is considering the following three investment projects (Ignore income taxes.): Project Q Project R Project S Investment required $ 57,200 $ 97,200 $ 176,000 Present value of cash inflows $ 62,092 $ 111,792 $ 193,320 The only cash outflows are the initial investments in the projects. Required: Rank the investment projects using the project profitability index.
Information on four investment proposals is given below: Investment Proposal A В Investment required Present value of cash inflows $ (360,000) $(50,000) $(140,000) $ (840,000) 214, 300 $ 146,900 $ 17,600 $ 74,300 $ 281,400 7 years 506,900 67,600 1,121,400 Net present value Life of the project 5 years 6 years б уears Required: 1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference.
The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year Investment Cash Inflow 1234567899 10 $ 30,000 $ 1,000 $ 3,000 $ 2,000 $ 4,000 $ 5,000 $ 8,000 $ 6,000 $ 4,000 $ 2,000 $ 1,000 $ 1,000 Required: 1. Determine the payback period of the investment. 2. Would the payback period be affected if the cash inflow in the last year were several times as large? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the payback period of the investment. (Round your answer to 1 decimal place.) Payback period years