The management of River Corporation is considering the purchase of a new machine costing $380,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year 1 2 3 10.5% O 5.5% O 25.5% Operating O 15.5% Income $20,000 20,000 20,000 20,000 20,000 Net Cash Flow $95,000 95,000 The average rate of return (rounded to one decimal place) for this investment is 95,000 95,000 95,000

The management of River Corporation is considering the purchase of a new machine costing $380,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year 1 2 3 10.5% O 5.5% O 25.5% Operating O 15.5% Income $20,000 20,000 20,000 20,000 20,000 Net Cash Flow $95,000 95,000 The average rate of return (rounded to one decimal place) for this investment is 95,000 95,000 95,000

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Internal Rate of Return A project is estimated to cost $244,296 and provide annual net cash flows of $58,000 for five years. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 Determine the internal rate of return for this project, using the Present Value of an Annuity of $1 at Compound Interest table shown above.fill in the blank 1 %
A business sets up a sinking fund so they will have a $68,000.00 to pay for a replacement piece of equipment in 12 years when the current equipment will be sold for scrap. If they make deposits at the end of each quarter for 12 years in the investment that pays 6.3% compounded quarterly, what size should each payment be? Answer: The quarterly payments are $. (Round to the nearest cent/penny)
Internal Rate of Return A project is estimated to cost $117,055 and provide annual net cash flows of $41,000 for four years. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 Determine the internal rate of return for this project, using the Present Value of an Annuity of $1 at Compound Interest table shown above. %
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One year ago, JK Mfg. deposited $20,839 in an investment account for the purpose of buying new equipment four years from today. Today, it is adding another $22872 to this account. The company plans on making a final deposit of $20,217 to the account one year from today. How much will be available when it is ready to buy the equipment, assuming the company earns 10.91% APR on its invest funds?
A company is considering an iron ore extraction project that requires an initial investment of $1,200,000 and will yield annual cash inflows of $534,283 for three years. The company's discount rate is 9%. Calculate IRR. Present value of ordinary annuity of $1: 10% 12% 14% 15% 16% 18% 20% 1 0.909 0.893 0.877 0.870 0.862 0.847 0.833 1.736 1.690 1.647 1.626 1.605 1.566 1.528 3 2.487 2.402 2.322 2.283 2.246 2.174 2.106 4 3.170 3.037 2.914 2.855 2.798 2.690 2.589 OA. 16% OB. 15% D OC. 14% O OD. 18%
(a) To upgrade its vehicles, the project Insignia is considering undertaking, the company is exploring the option of obtaining the $10,000,000 required via a loan from its bank for a term of 4 years, at an interest rate of 12% per annum. Monthly payments are expected to be made on the loan. Required: i. Calculate Insignia Corp.'s monthly payment on this loan. ii. Prepare the company's Amortization Schedule for the first three (3) months of this loan, clearly showing the interest and principal payments.
Boseman Department Store is considering the purchase of a new machine at a cost of $22,802. The machine will provide $3,500 per year in cash flow for nine years. Boseman has a cost of capital of 10%. (Round discount factor to five decimal places.) Based on the internal control method, should this project be undertaken? A partial table of the present value of an annuity of $1 in arrears is as follows: Year 1% 3% 5% 7% 9% 11% 13% 15% 9 8.56602 7.78611 7.10782 6.51523 5.99525 5.5370 5.1317 4.7716 What is the internal rate of return for this investment? (Round discount factor to five decimal places.)
answer an discuss pls
Kerr Kompany is considering investing in a project that costs $50,000 and is expected to generate cash inflows of $20,450 at the end of each year for three years. The company requires a 11% rate of return on all new investments. Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 3 2.531 2.489 2.444 2.402 4 3.239 3.170 3.102 3.037 The profitability index for this project is: A. 1.00. B. 0.80. C. 1.24. D. 1.27.
Keystone Healthcare Corp. is proposing to spend $101,700 on a 10-year project that has estimated net cash flows of $18,000 for each of the 10 years. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.352 2.991 6 4.917 4.355 4.111 3.784 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a. Compute the net present value, using a rate of return of 15%. Use the table of present value of an annuity of $1 presented above. If required, round to the nearest dollar. Use the minus sign to indicate a negative net present value. Present value of annual net cash flows $ Less amount to be invested $ Net present value $ b. Based on the analysis prepared in part (a), is the rate of return (1) more than…
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