Initial capital outlay, cash flows after tax and terminal cash flow of this project needs to be computed. Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Question

Want to see the full answer?

Answer 1

Question

Chapter 12, Problem 4P

a.

Summary Introduction

Interpretation: Initial capital outlay, cash flows after tax and terminal cash flow of this project needs to be computed.

Concept introduction:Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

b.

Summary Introduction

Interpretation: Net present value, Profitability Index, IRR, MIRR, Payback period and discounted payback period needs to be computed.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Payback period 0.84

Discounted Payback period 0.9299

NPV $1,883,164

PI 3.8044

IRR 119%

MIRR 52%

Payback period: It is the period in which cash flow of investment covers the initial investment. It can be computed shown below:

Discounted payback period: It is the period in which discounted cash flow of investment covers the initial investment. It can be computed shown below:

Net present value: NPV is the sum of present value of the cash flows and initial investment when discounted at 11%. It can be computed as:

Profitability Index: It is used to analyze the profitability of an investment wherein its cash flow is divided by the initial investment It can be computed as:

IRR& MIRR: Internal rate of return is the expected return on the investment while MIRR is the rate of return after considering reinvestment rate. It can be computed as:

The formula used to compute IRR and MIRR is as follows:

c.

Interpretation: A scenario analysis is required.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

1. Click on “Data” menu and select “scenario Manager” under “what if Analysis” option, then click on “add” option.Then rename the scenario name and select changing cells which need to replace.

2. Enter values which need to be resulted in that scenario, accordingly.

3. Then click on “summary” option to get the various scenario analysis.

4. Scenario Analysis will represent the final output in given scenario.

c.

Summary Introduction

Interpretation: A scenario analysis is required.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Chicago Turkey is considering a new turkey to service its western region stores. The stores currently require 650,000 turkeys per year, and they are purchased from various local turkey farms for an average price of $8 per bird. The managers believe that their new farm would lower the cost per bird to $7, while maintaining the average selling price of $12 per bird. However, due to the centralized structure of this operation, shipping expenses will increase to $1.25 per bird from the current $1.00. The firm will need to increase its inventory of live turkeys by $45,000. It will cost $200,000 to purchase the land and $350,000 to construct the buildings and purchase equipment. In addition, labor expenses will rise by $250,000 per year. The buildings and equipment will be depreciated using the straight-line method over five years to a salvage value of $100,000. After five years, the company will sell the farm for $300,000 ($100,000 for the buildings and equipment, $200,000 for the land).…

The Fleming Company, a food distributor, is considering replacing a filling line at its Oklahoma City warehouse. The existing line was purchased several years ago for $3,600,000. The line’s book value is $445,000, and Fleming's management feels it could be sold at this time for $350,000. A new, increased capacity line can be purchased for $2,575,000 and will require and increase in NWC of $55,000. Delivery and installation of the new line are expected to cost $50,000 and 215,000 respectively. Assuming Fleming’s marginal tax rate is 35%, calculate the net investment for the new line.

Burger King is looking to introduce a new veggie burger in Berwyn. Their analysts estimate that they will sell 12,000 veggie burgers per year. The unit cost per veggie burger is $0.58 and they plan on selling it for $2.5. If the current sales of meat burgers go down from 34,200 units per year to 28,600 units, what is the erosion cost? Assume that a meat burger costs $0.48 to produce and it sells for $2.0. Group of answer choices $12,511.00 $10,179.00 $2,978.00 $9,728.00 $8,512.00 Only typing answer Please answer explaining in detail step by step without table and graph thankyou

Answer 2

Question

Chapter 12, Problem 4P

a.

Summary Introduction

Interpretation: Initial capital outlay, cash flows after tax and terminal cash flow of this project needs to be computed.

Concept introduction:Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

b.

Summary Introduction

Interpretation: Net present value, Profitability Index, IRR, MIRR, Payback period and discounted payback period needs to be computed.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Payback period 0.84

Discounted Payback period 0.9299

NPV $1,883,164

PI 3.8044

IRR 119%

MIRR 52%

Payback period: It is the period in which cash flow of investment covers the initial investment. It can be computed shown below:

Discounted payback period: It is the period in which discounted cash flow of investment covers the initial investment. It can be computed shown below:

Net present value: NPV is the sum of present value of the cash flows and initial investment when discounted at 11%. It can be computed as:

Profitability Index: It is used to analyze the profitability of an investment wherein its cash flow is divided by the initial investment It can be computed as:

IRR& MIRR: Internal rate of return is the expected return on the investment while MIRR is the rate of return after considering reinvestment rate. It can be computed as:

The formula used to compute IRR and MIRR is as follows:

c.

Interpretation: A scenario analysis is required.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

1. Click on “Data” menu and select “scenario Manager” under “what if Analysis” option, then click on “add” option.Then rename the scenario name and select changing cells which need to replace.

2. Enter values which need to be resulted in that scenario, accordingly.

3. Then click on “summary” option to get the various scenario analysis.

4. Scenario Analysis will represent the final output in given scenario.

c.

Summary Introduction

Interpretation: A scenario analysis is required.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 12, Problem 4P

a.

Summary Introduction

Interpretation: Initial capital outlay, cash flows after tax and terminal cash flow of this project needs to be computed.

Concept introduction:Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

b.

Summary Introduction

Interpretation: Net present value, Profitability Index, IRR, MIRR, Payback period and discounted payback period needs to be computed.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Payback period 0.84

Discounted Payback period 0.9299

NPV $1,883,164

PI 3.8044

IRR 119%

MIRR 52%

Payback period: It is the period in which cash flow of investment covers the initial investment. It can be computed shown below:

Discounted payback period: It is the period in which discounted cash flow of investment covers the initial investment. It can be computed shown below:

Net present value: NPV is the sum of present value of the cash flows and initial investment when discounted at 11%. It can be computed as:

Profitability Index: It is used to analyze the profitability of an investment wherein its cash flow is divided by the initial investment It can be computed as:

IRR& MIRR: Internal rate of return is the expected return on the investment while MIRR is the rate of return after considering reinvestment rate. It can be computed as:

The formula used to compute IRR and MIRR is as follows:

c.

Interpretation: A scenario analysis is required.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

1. Click on “Data” menu and select “scenario Manager” under “what if Analysis” option, then click on “add” option.Then rename the scenario name and select changing cells which need to replace.

2. Enter values which need to be resulted in that scenario, accordingly.

3. Then click on “summary” option to get the various scenario analysis.

4. Scenario Analysis will represent the final output in given scenario.

c.

Summary Introduction

Interpretation: A scenario analysis is required.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 12, Problem 4P

a.

Summary Introduction

Interpretation: Initial capital outlay, cash flows after tax and terminal cash flow of this project needs to be computed.

Concept introduction:Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

b.

Summary Introduction

Interpretation: Net present value, Profitability Index, IRR, MIRR, Payback period and discounted payback period needs to be computed.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Payback period 0.84

Discounted Payback period 0.9299

NPV $1,883,164

PI 3.8044

IRR 119%

MIRR 52%

Payback period: It is the period in which cash flow of investment covers the initial investment. It can be computed shown below:

Discounted payback period: It is the period in which discounted cash flow of investment covers the initial investment. It can be computed shown below:

Net present value: NPV is the sum of present value of the cash flows and initial investment when discounted at 11%. It can be computed as:

Profitability Index: It is used to analyze the profitability of an investment wherein its cash flow is divided by the initial investment It can be computed as:

IRR& MIRR: Internal rate of return is the expected return on the investment while MIRR is the rate of return after considering reinvestment rate. It can be computed as:

The formula used to compute IRR and MIRR is as follows:

c.

Interpretation: A scenario analysis is required.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

1. Click on “Data” menu and select “scenario Manager” under “what if Analysis” option, then click on “add” option.Then rename the scenario name and select changing cells which need to replace.

2. Enter values which need to be resulted in that scenario, accordingly.

3. Then click on “summary” option to get the various scenario analysis.

4. Scenario Analysis will represent the final output in given scenario.

c.

Summary Introduction

Interpretation: A scenario analysis is required.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 12, Problem 4P

a.

Summary Introduction

Interpretation: Initial capital outlay, cash flows after tax and terminal cash flow of this project needs to be computed.

Concept introduction:Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

b.

Summary Introduction

Interpretation: Net present value, Profitability Index, IRR, MIRR, Payback period and discounted payback period needs to be computed.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Payback period 0.84

Discounted Payback period 0.9299

NPV $1,883,164

PI 3.8044

IRR 119%

MIRR 52%

Payback period: It is the period in which cash flow of investment covers the initial investment. It can be computed shown below:

Discounted payback period: It is the period in which discounted cash flow of investment covers the initial investment. It can be computed shown below:

Net present value: NPV is the sum of present value of the cash flows and initial investment when discounted at 11%. It can be computed as:

Profitability Index: It is used to analyze the profitability of an investment wherein its cash flow is divided by the initial investment It can be computed as:

IRR& MIRR: Internal rate of return is the expected return on the investment while MIRR is the rate of return after considering reinvestment rate. It can be computed as:

The formula used to compute IRR and MIRR is as follows:

c.

Interpretation: A scenario analysis is required.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

1. Click on “Data” menu and select “scenario Manager” under “what if Analysis” option, then click on “add” option.Then rename the scenario name and select changing cells which need to replace.

2. Enter values which need to be resulted in that scenario, accordingly.

3. Then click on “summary” option to get the various scenario analysis.

4. Scenario Analysis will represent the final output in given scenario.

c.

Summary Introduction

Interpretation: A scenario analysis is required.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Answer 6

Chapter 12, Problem 4P

a.

Summary Introduction

Interpretation: Initial capital outlay, cash flows after tax and terminal cash flow of this project needs to be computed.

Concept introduction:Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Answer 7

Chapter 12, Problem 4P

a.

Summary Introduction

Interpretation: Initial capital outlay, cash flows after tax and terminal cash flow of this project needs to be computed.

Concept introduction:Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Answer 8

b.

Summary Introduction

Interpretation: Net present value, Profitability Index, IRR, MIRR, Payback period and discounted payback period needs to be computed.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Payback period 0.84

Discounted Payback period 0.9299

NPV $1,883,164

PI 3.8044

IRR 119%

MIRR 52%

Payback period: It is the period in which cash flow of investment covers the initial investment. It can be computed shown below:

Discounted payback period: It is the period in which discounted cash flow of investment covers the initial investment. It can be computed shown below:

Net present value: NPV is the sum of present value of the cash flows and initial investment when discounted at 11%. It can be computed as:

Profitability Index: It is used to analyze the profitability of an investment wherein its cash flow is divided by the initial investment It can be computed as:

IRR& MIRR: Internal rate of return is the expected return on the investment while MIRR is the rate of return after considering reinvestment rate. It can be computed as:

The formula used to compute IRR and MIRR is as follows:

c.

Interpretation: A scenario analysis is required.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

1. Click on “Data” menu and select “scenario Manager” under “what if Analysis” option, then click on “add” option.Then rename the scenario name and select changing cells which need to replace.

2. Enter values which need to be resulted in that scenario, accordingly.

3. Then click on “summary” option to get the various scenario analysis.

4. Scenario Analysis will represent the final output in given scenario.

Answer 9

b.

Summary Introduction

Interpretation: Net present value, Profitability Index, IRR, MIRR, Payback period and discounted payback period needs to be computed.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Payback period 0.84

Discounted Payback period 0.9299

NPV $1,883,164

PI 3.8044

IRR 119%

MIRR 52%

Payback period: It is the period in which cash flow of investment covers the initial investment. It can be computed shown below:

Discounted payback period: It is the period in which discounted cash flow of investment covers the initial investment. It can be computed shown below:

Net present value: NPV is the sum of present value of the cash flows and initial investment when discounted at 11%. It can be computed as:

Profitability Index: It is used to analyze the profitability of an investment wherein its cash flow is divided by the initial investment It can be computed as:

IRR& MIRR: Internal rate of return is the expected return on the investment while MIRR is the rate of return after considering reinvestment rate. It can be computed as:

The formula used to compute IRR and MIRR is as follows:

c.

Interpretation: A scenario analysis is required.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

1. Click on “Data” menu and select “scenario Manager” under “what if Analysis” option, then click on “add” option.Then rename the scenario name and select changing cells which need to replace.

2. Enter values which need to be resulted in that scenario, accordingly.

3. Then click on “summary” option to get the various scenario analysis.

4. Scenario Analysis will represent the final output in given scenario.

Answer 10

c.

Summary Introduction

Interpretation: A scenario analysis is required.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Answer 11

c.

Summary Introduction

Interpretation: A scenario analysis is required.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 15

Ch. 12 - Prob. 4P

Initial capital outlay, cash flows after tax and terminal cash flow of this project needs to be computed. Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Solution Summary: The author explains that Capital Budgeting technique is the most useful tool for financial management to understand the investment in project is financially viable or not.

Concept explainers

Videos

Interpretation: A scenario analysis is required.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Want to see the full answer?

Chapter 12 Solutions

Initial capital outlay, cash flows after tax and terminal cash flow of this project needs to be computed. Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Solution Summary: The author explains that Capital Budgeting technique is the most useful tool for financial management to understand the investment in project is financially viable or not.

Concept explainers

Videos

Interpretation: A scenario analysis is required. Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.

Want to see the full answer?

Chapter 12 Solutions

Interpretation: A scenario analysis is required.

Concept introduction: Capital Budgeting technique is the most useful tool for financial management which helps to understand the investment in project is financially viable or not.