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A dairy owner is deciding whether or not to invest in new milk machines. The cost of the machines is $100,000. If she purchases the machines, the dairy will earn $30,000 in the first year, $50,000 in the second year, and $60,000 in year 3. What is the NPV of the investment? (Rounded to the nearest whole dollar)
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- A grocery store is considering the purchase of a new refrigeration unit with an Initial Investment of $412,000, and the store expects a return of $100,000 in year one, $72000 in years two and three, $65,000 in years four and five, and $38,000 in year six and beyond, what is the payback period?A farmer sows a certain crop. It costs $240,000 to buy the seed, prepare the ground, and sow the crop. In one year's time it will cost $123,200 to harvest the crop. The farmer's best estimate is that the crop will be worth $380,000 in one year. The farmer can borrow and lend at an interest rate is 7%. Part B) The farmer is concerned about the uncertainty surrounding the price that she will receive for her harvested crop in one year. She has the opportunity to enter into a forward agreement whereby she can lock-in a sale price of $405,000 for her harvested crop in one year, thus eliminating any uncertainty. The cost of entering into this contract is $23,500, payable today. Should the farmer enter into this forward agreement and lock-in the sale price of her harvested crop? O A. Yes, she should enter into this agreement. O B. No, she should not enter into this agreement, Part C) What price would the farmer need to pay for the forward agreement described in Part B such that the NPV of her…A farmer sows a certain crop. It costs $240,000 to buy the seed, prepare the ground, and sow the crop, In one year's time it will cost $123,200 to harvest the crop. The farmer's best estimate is that the crop will be worth $380,000 in one year. The farmer can borrow and lend at an interest rate is 7%. Part B) The farmer is concerned about the uncertainty surrounding the price that she will receive for her harvested crop in one year. She has the opportunity to enter into a forward agreement whereby she can lock-in a sale price of $405,000 for her harvested crop in one year, thus eliminating any uncertainty. The cost entering into this contract is $23,500, payable today. Should the farmer enter into this forward agreement and lock-in the sale price of her harvested crop? O A. Yes, she should enter into this agreement. O B. No, she should not enter into this agreement,
- A farm must decide whether or not to purchase anew tractor.The tractor will reduc costs by $2,000 in the first year,$2,500 in the second and $3,000 in the third and final year of usefulness.The tractor costs $9,000 today,while the above cost savings will be relized at the end of each year. if the interest rate is 7%. what is the net present value of purchasing the tractor?Evee Cardenas is interested in investing in a women's specialty shop. The cost of the investment is $180,000. She estimates that the return from owning her own shop will be $55,000 per year. She estimates that the shop will have a useful life of 6 years. Required: 2. Conceptual Connection: Assuming a required rate of return of 8%, calculate the NPV for Evee Cardenas' investment. Round to the nearest dollar. If required, round all present value calculations to the nearest dollar. Use the minus sign to indicate a negative NPV.$fill in the blank 3 Should she invest?Yes/noEvee Cardenas is interested in investing in a women's specialty shop. The cost of the investment is $280,000. She estimates that the return from owning her own shop will be $35,000 per year. She estimates that the shop will have a useful life of 6 years. Assuming a required rate of return of 8%, calculate the NPV for Evee Cardenas' investment. What if the estimated return was $135,000 per year? Calculate the new NPV for Evee Cardenas' investment.
- Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. Campbell Manufacturing is considering the purchase of a new welding system. The cash benefits will be $480,000 per year. The system costs $2,700,000 and will last 10 years. Evee Cardenas is interested in investing in a women’s specialty shop. The cost of the investment is $270,000. She estimates that the return from owning her own shop will be $52,500 per year. She estimates that the shop will have a useful life of 6 years. Barker Company calculated the NPV of a project and found it to be $63,900. The project’s life was estimated to be 8 years. The required rate of return used for the NPV calculation was 10%. The project was expected to produce annual after-tax cash flows of $135,000. 2. Conceptual Connection: Assuming a required rate of return of 8%, calculate the NPV for Evee Cardenas' investment. Round to the nearest dollar. If required, round all present value calculations to the…Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. Campbell Manufacturing is considering the purchase of a new welding system. The cash benefits will be $480,000 per year. The system costs $2,700,000 and will last 10 years. Evee Cardenas is interested in investing in a women’s specialty shop. The cost of the investment is $270,000. She estimates that the return from owning her own shop will be $52,500 per year. She estimates that the shop will have a useful life of 6 years. Barker Company calculated the NPV of a project and found it to be $63,900. The project’s life was estimated to be 8 years. The required rate of return used for the NPV calculation was 10%. The project was expected to produce annual after-tax cash flows of $135,000. Required: 1. Compute the NPV for Campbell Manufacturing, assuming a discount rate of 12%. If required, round all present value calculations to the nearest dollar.$ Should the company buy the new welding…Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. Campbell Manufacturing is considering the purchase of a new welding system. The cash benefits will be $480,000 per year. The system costs $1,650,000 and will last 10 years. Evee Cardenas is interested in investing in a women's specialty shop. The cost of the investment is $230,000. She estimates that the return from owning her own shop will be $55,000 per year. She estimates that the shop will have a useful life of 6 years. Barker Company calculated the NPV of a project and found it to be $63,900. The project's life was estimated to be 8 years. The required rate of return used for the NPV calculation was 10%. The project was expected to produce annual after-tax cash flows of $135,000. Required: 1. Compute the NPV for Campbell Manufacturing, assuming a discount rate of 12%. If required, round all present value calculations to the nearest dollar. Use the minus sign to indicate a…
- Solve the following three independent scenarios: A grocery store is considering the purchase of a new refrigeration unit with an initial investment of $412,000, and the store expects a return of $100,000 in year one, $72,000 in years two and three, $65,000 in years four and five, and $38,000 in year six and beyond, what is the payback period? 1. Payback period = ___________ years. Round your Payback Period (PB) answer to two decimal places (i.e. 12.34). An auto repair company needs a new machine that will check for defective sensors. The machine has an initial investment of $224,000. Incremental revenues, including cost savings, are $120,000, and incremental expenses, including depreciation, are $50,000. There is no salvage value. What is the accounting rate of return (ARR)? 2. Accounting Rate of Return (ARR) = ______________ Round your ARR answer, in percentage format, to two decimal places (i.e. 12.34%).Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a. Campbell Manufacturing is considering the purchase of a new welding system. The cash benefits will be $480,000 per year. The system costs $2,150,000 and will last 10 years. b. Evee Cardenas is interested in investing in a women's specialty shop. The cost of the investment is $280,000. She estimates that the return from owning her own shop will be $40,000 per year. She estimates that the shop will have a useful life of 6 years. c. Barker Company calculated the NPV of a project and found it to be $63,900. The project's life was estimated to be 8 years. The required rate of return used for the NPV calculation was 10%. The project was expected to produce annual after-tax cash flows of $135,000. Required: 1. Compute the NPV for Campbell Manufacturing, assuming a discount rate of 12%. If required, round all present value calculations to the nearest dollar. Use the minus sign to indicate a…Nemo Haulers is considering whether to purchase a new mini tractor for moving furniture within its warehouse. Nemo calculates that its current mini tractor generates $3100 of cash flow per year. A new mini tractor would cost $3000 and would provide cash flow of $4000 per year for five years. What is the equivalent annual cash flow for the new mini tractor (round to the nearest dollar), and should Nemo purchase the new tractor? Assume the cost of capital for Nemo is 10 per cent. $4000, purchase the new tractor $3000, do not purchase the new tractor $3209, purchase the new tractor $12 163, purchase the new tractor