Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780134128528
Author: Karen W. Braun, Wendy M. Tietz
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 12, Problem 12.52BE
1.
To determine
The NPV of the project SF for company S.
2.
To determine
The NPV of the project SF for company S if it has zero residual value.
To conclude: If the project is still attractive if it has zero residual value.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
1-Build an Excel Model to compute the NPV of investment project I or II and make sure that the model works (allows for changes in the inputs ,updates the output-NPV-and gives the same result).
2-Make your assumptions for a hypothetical project and compute the NPV. Then, show how NPV would change when you change specific inputs (ceteris paribus). Do this analysis for at least 3 inputs using scenario analysis or data tables, assigning different values to each input.
Dwight Donovan, the president of Campbell Enterprises, is considering two investment opportunities. Because of limited
resources, he will be able to invest in only one of them. Project A is to purchase a machine that will enable factory
automation; the machine is expected to have a useful life of four years and no salvage value. Project B supports a
training program that will improve the skills of employees operating the current equipment. Initial cash expenditures for
Project A are $102,000 and for Project B are $47,000. The annual expected cash inflows are $32,178 for Project A and
$15,474 for Project B. Both investments are expected to provide cash flow benefits for the next four years. Campbell
Enterprises' desired rate of return is 6 percent. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables
provided.)
Required
a. Compute the net present value of each project. Which project should be adopted based on the net present value
approach?
b. Compute the approximate…
Please analyze. Build an Excel Model to compute the NPV of investment project I or II and make sure that the model works (allows for changes in the inputs ,updates the output-NPV-and gives the same result).
Could you send with a excel files?
Chapter 12 Solutions
Managerial Accounting (5th Edition)
Ch. 12 - Prob. 1QCCh. 12 - (Learning Objective 2) After identifying potential...Ch. 12 - Prob. 3QCCh. 12 - Prob. 4QCCh. 12 - Prob. 5QCCh. 12 - Prob. 6QCCh. 12 - Prob. 7QCCh. 12 - Prob. 8QCCh. 12 - Prob. 9QCCh. 12 - (Learning Objective 5) Which of the following...
Ch. 12 - Order the capital budgeting process (Learning...Ch. 12 - Prob. 12.2SECh. 12 - Prob. 12.3SECh. 12 - Prob. 12.4SECh. 12 - Prob. 12.5SECh. 12 - Prob. 12.6SECh. 12 - Prob. 12.7SECh. 12 - Prob. 12.8SECh. 12 - Prob. 12.9SECh. 12 - Prob. 12.10SECh. 12 - Prob. 12.11SECh. 12 - Prob. 12.12SECh. 12 - Prob. 12.13SECh. 12 - Prob. 12.14SECh. 12 - Prob. 12.15SECh. 12 - Identify ethical standards violated (Learning...Ch. 12 - Prob. 12.17AECh. 12 - Compute payback period and analyze changes...Ch. 12 - Prob. 12.19AECh. 12 - Prob. 12.20AECh. 12 - Prob. 12.21AECh. 12 - Prob. 12.22AECh. 12 - Calculate the payback and NPV for a sustainable...Ch. 12 - Prob. 12.24AECh. 12 - Prob. 12.25AECh. 12 - Prob. 12.26AECh. 12 - Prob. 12.27AECh. 12 - Prob. 12.28AECh. 12 - Prob. 12.29AECh. 12 - Prob. 12.30AECh. 12 - Prob. 12.31AECh. 12 - Prob. 12.32AECh. 12 - Prob. 12.33AECh. 12 - Prob. 12.34AECh. 12 - Prob. 12.35AECh. 12 - Prob. 12.36BECh. 12 - Prob. 12.37BECh. 12 - Prob. 12.38BECh. 12 - Prob. 12.39BECh. 12 - Prob. 12.40BECh. 12 - Prob. 12.41BECh. 12 - Prob. 12.42BECh. 12 - Prob. 12.43BECh. 12 - Prob. 12.44BECh. 12 - Prob. 12.45BECh. 12 - Prob. 12.46BECh. 12 - Prob. 12.47BECh. 12 - Prob. 12.48BECh. 12 - Prob. 12.49BECh. 12 - Prob. 12.50BECh. 12 - Prob. 12.51BECh. 12 - Prob. 12.52BECh. 12 - Prob. 12.53BECh. 12 - Prob. 12.54BECh. 12 - Prob. 12.55APCh. 12 - Prob. 12.56APCh. 12 - Prob. 12.57APCh. 12 - Prob. 12.58APCh. 12 - Prob. 12.59BPCh. 12 - Prob. 12.60BPCh. 12 - Evaluate an investment using all four methods...Ch. 12 - Prob. 12.62BPCh. 12 - Prob. 12.63SCCh. 12 - Discussion Questions 1. Describe the capital...Ch. 12 - Prob. 12.65ACTCh. 12 - Prob. 12.66ACTCh. 12 - Prob. 12.67ACT
Knowledge Booster
Similar questions
- Use attachment to answer question q3- This question relates to the diagram, which shows the NPV profile for Projects X and Y. What is the Internal Rate of Return of Project X? Select one: a. 13% b. 9% c. 4% d. 10%arrow_forwardObjective: This case deals with the capital budgeting techniques of Net Present Value (i.e. NPV) and Internal Rate of Return (i.e. IRR), Payback Period and Profitability Index. In this case, students will compare seven projects considering the are dependent projects using NPV and IRR, Pay back Period and Pl and choose the best project. They will learn about NPV and IRR methods and their advantages and disadvantages. Students will also learn the weakness of the IRR method when comparing two or more projects. Finally, they will evaluate these projects assuming that the projects are independent projects rather than mutually exclusive ones. This is a hands-on experience for students who want to delve into project valuation. Projects Year Project A Project Project Project Project Project Project D B E F G -2000 -1500 -2000 -2500 -2000 -8000 -3000 1 200 100 1000 1000 150 200 300 2 350 200 800 1000 160 400 600 3 500 100 600 1000 190 600 900 4 650 200 200 1000 200 800 1200 5 800 400 200 1000…arrow_forwardUsing image: a-1. What is the payback period for each project a-2. If you apply the payback criterion, which investment will you choose? b-1. What is the discounted payback period for each project? b-2. If you apply the discounted payback criterion, which investment will you choose? c-1. What is the NPV for each project? c-2. If you apply the NPV criterion, which investment will you choose? d-1. What is the IRR for each project? d-2. If you apply the IRR criterion, which investment will you choose? e-1. What is the profitability index for each project? e-2. If you apply the profitability index criterion, which investment will you choose? f. Based on your answers in (a) through (e), which project will you finally choose?arrow_forward
- Compute the Profitability Index (PI) for each project? Project A Project B Profitability Index (PI) 5- In light of your answers above, suppose that these two projects might be mutually exclusive or independent. According to these two assumptions, fill in the blanks in the table below with the suitable answer: Points Investment Criteria If A and B are mutually exclusive, then I would select If A and B are independent, then I would select PBP NPV IRR PIarrow_forward1.How do you measure the success of a project? 2.How do you handle failure? Brainwriting is an idea generation technique where you can write down your ideas about a particular question/topic.arrow_forwardI'm working through a practice assignment with an answer key and I'm getting Answer A for question 4 but the answer key for this one says the answer is C. Can someone work through this one and show me how its done please? For questions 3-4, consider the following table. Investment Investment cost at i = 0 Revenue at t = 1 Revenue at t= 3. 180 200 -200 50 -300 149 Table 1 Suppose that you need to choose between two investment options A and B. Given that the persistent anmual interest rate is 5 percent, which investment option would yiel a higher value? (a) Option A. (b) Option B. (c) Both options would yield the same value. (d) Not enough information.arrow_forward
- What does Highest and Best Use consist of? Group of answer choices: (1) legally permissible (2) physically possible (3) return on investment (4) maximally productive (1) legally permissible (2) physically possible (3) financially feasible (4) maximally productive (1) legally permissible (2) physically pleasing (3) financially feasible (4) maximally productive (1) legally permissible (2) physically possible (3) financially feasible (4) maximum income productionarrow_forwardCan someone help me figure out this problem? Complete the following homework scenario:Compare the results of the three methods by quality of information for decision making. Using what you have learned about the three methods, identify the best project by the criteria of long term increase in value. (You do not need to do further research.) Convey your understanding of the Time Value of Money principles used or not used in the three methods. Review the video titled "NPV, IRR, MIRR for Mac and PC Excel" (located at and previously listed in Week 4) to help you understand the foundational concepts:Scenario Information:Assume that two gas stations are for sale with the following cash flows: CF1 is the Cash Flow in the first year, and CF2 is the Cash Flow in the second year. This is the timeline and data used in calculating the Payback Period, Net Present Value, and Internal Rate of Return. The calculations are done for you. Your task is to select the best project and explain your…arrow_forwardPlease calculate the Net present value for Project A and B in the way shown on photo (only shown as example). And explain how it has been calculatedarrow_forward
- What are the four P's of effective software project management?The Cost Benefit Analysis (CBA) economic evaluation assessment technique is used to calculate the total financial benefits and expenses of a programme. Explain?arrow_forwardUse the information below and help the management in choosing the most desirable Project using all the following techniques:1) Payback Period Technique.2) Discounted Payback Period Technique.3) Net Present Value Technique4) Profitability Index Technique. Based on your answer which project is better and why? please show the steps and formula Thanksarrow_forwardComplete the following homework scenario:Compare the results of the three methods by quality of information for decision making. Using what you have learned about the three methods, identify the best project by the criteria of long term increase in value. (You do not need to do further research.) Convey your understanding of the Time Value of Money principles used or not used in the three methods. Review the video titled "NPV, IRR, MIRR for Mac and PC Excel" (located at and previously listed in Week 4) to help you understand the foundational concepts:Scenario Information:Assume that two gas stations are for sale with the following cash flows: CF1 is the Cash Flow in the first year, and CF2 is the Cash Flow in the second year. This is the timeline and data used in calculating the Payback Period, Net Present Value, and Internal Rate of Return. The calculations are done for you. Your task is to select the best project and explain your decision. The methods are presented and the decision…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education