Zachary Modems, Incorporated (ZMI) has several capital investment opportunities. The term, expected annual cash inflows, and the cost of each opportunity are outlined in the following table. ZMI has established a desired rate of return of 12 percent for these investment opportunities. (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Opportunity A B C D Investment term 4 years 5 years 3 years 5 years Expected cash inflow Cost of investment $ 3,800 $ 10,100 $ 6,600 $ 19,800 $ 3,300 $ 5,600 $ 8,000 $ 20,200 Required es a. Compute the net present value of each investment opportunity and record your answers in the following table. The results for Investment Opportunity A have been recorded in the table as an example. b. Determine the net present value and the internal rate of return for each investment opportunity. Record the results in the following table. The results for investment Opportunity A have been recorded in the following table as an example. Note that the manual computation yields the same net present value amounts as the financial function routines of Excel or a financial calculator. Complete this question by entering your answers in the tabs below. Required A Required B Compute the net present value of each investment opportunity and record your answers in the following table. The results for Investment Opportunity A have been recorded in the table as an example. Note: Negative amounts should be indicated by minus sign. Round "Present value of cash flows and Net present value" to 2 decimal places. Opportunity A B C D Cash inflow $ 3,800 $ 6,600 $ 3,300 $ 5,600 Times present value factor Present value of cash flows $ 3.037349 11,541.93 Minus cost of investment Net present value $ (10,100.00) 1,441.93 (19,800.00) (8,000.00) (20,200.00)
Zachary Modems, Incorporated (ZMI) has several capital investment opportunities. The term, expected annual cash inflows, and the cost of each opportunity are outlined in the following table. ZMI has established a desired rate of return of 12 percent for these investment opportunities. (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Opportunity A B C D Investment term 4 years 5 years 3 years 5 years Expected cash inflow Cost of investment $ 3,800 $ 10,100 $ 6,600 $ 19,800 $ 3,300 $ 5,600 $ 8,000 $ 20,200 Required es a. Compute the net present value of each investment opportunity and record your answers in the following table. The results for Investment Opportunity A have been recorded in the table as an example. b. Determine the net present value and the internal rate of return for each investment opportunity. Record the results in the following table. The results for investment Opportunity A have been recorded in the following table as an example. Note that the manual computation yields the same net present value amounts as the financial function routines of Excel or a financial calculator. Complete this question by entering your answers in the tabs below. Required A Required B Compute the net present value of each investment opportunity and record your answers in the following table. The results for Investment Opportunity A have been recorded in the table as an example. Note: Negative amounts should be indicated by minus sign. Round "Present value of cash flows and Net present value" to 2 decimal places. Opportunity A B C D Cash inflow $ 3,800 $ 6,600 $ 3,300 $ 5,600 Times present value factor Present value of cash flows $ 3.037349 11,541.93 Minus cost of investment Net present value $ (10,100.00) 1,441.93 (19,800.00) (8,000.00) (20,200.00)
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 3PB: Net present value method, present value index, and analysis for a service company First United Bank...
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Question
Transcribed Image Text:Zachary Modems, Incorporated (ZMI) has several capital investment opportunities. The term, expected annual cash inflows, and the
cost of each opportunity are outlined in the following table. ZMI has established a desired rate of return of 12 percent for these
investment opportunities. (PV of $1 and PVA of $1)
Note: Use appropriate factor(s) from the tables provided.
Opportunity
A
B
C
D
Investment term
4 years
5 years
3 years
5 years
Expected cash inflow
Cost of investment
$ 3,800
$ 10,100
$ 6,600
$ 19,800
$ 3,300
$ 5,600
$ 8,000
$ 20,200
Required
es
a. Compute the net present value of each investment opportunity and record your answers in the following table. The results for
Investment Opportunity A have been recorded in the table as an example.
b. Determine the net present value and the internal rate of return for each investment opportunity. Record the results in the following
table. The results for investment Opportunity A have been recorded in the following table as an example. Note that the manual
computation yields the same net present value amounts as the financial function routines of Excel or a financial calculator.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Compute the net present value of each investment opportunity and record your answers in the following table. The results for
Investment Opportunity A have been recorded in the table as an example.
Note: Negative amounts should be indicated by minus sign. Round "Present value of cash flows and Net present value" to 2
decimal places.
Opportunity
A
B
C
D
Cash inflow
$
3,800 $
6,600 $
3,300 $
5,600
Times present value factor
Present value of cash flows
$
3.037349
11,541.93
Minus cost of investment
Net present value
$
(10,100.00)
1,441.93
(19,800.00)
(8,000.00)
(20,200.00)
<Required A
Required B >
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