Financial Accounting Plus MyLab Accounting with Pearson eText -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134833132
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
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Chapter F, Problem F.9BP
To determine
To select: The investment opportunities from the two plans that require same amount of initial investment, assuming a 12% interest rate.
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Students have asked these similar questions
Assume a $40,000 investment and the following cash flows for two alternatives.
Year Investment A Investment B
1 $10,00 10,000
2 10,000 20,000
3 15,000 25,000
4 10,000 -
5 20,000 -
a. Calculate the payback for investments A and B. (Round your answers to 2 decimal places.)
b. Which investment would you select under the payback method?
multiple choice 1
Investment A
Investment B
c. If the inflow in the fifth year for Investment A was $20,000,000 instead of $20,000, would your answer change under the payback method?
multiple choice 2
Yes
No
Consider two projects, A and B.
Year
0
1
2
Cashflow (in £) for A
-4,000
1,882
4,000
Find the value of X if the positive internal rate of return (IRR) for both projects are the same.
Give your answer to 2 decimal places.
Cashflow (in £) for B
-2,000
-4,000
X
A company has two investment possibilities, with the following cash inflows:
Investment
Year 1
Year 2
Year 3
A
$1,500
1,900
2,200
B
$1,400
1,400
1,400
If the firm can earn 6 percent in other investments, what is the present value of investments A and B? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar.PV(Investment A): $ PV(Investment B): $
If each investment costs $4,000, is the present value of each investment greater than the cost of the investment?The present value of investment A is -Select-less than greater than Item 3 the cost.The present value of investment B is -Select-less than greater than Item 4 the cost.
Chapter F Solutions
Financial Accounting Plus MyLab Accounting with Pearson eText -- Access Card Package (12th Edition)
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- Damien offers you a sequence of end-of-year cash flows for an investment as follows: Year 1 2 3 4 4 What is the value of the cash flows if the opportunity cost is 6 percent? (Round to the nearest dollar). Please click on the following link to access a blank worksheet Click to open:: O $8.392 $8.598 Cash Flow $4,000 $3,000 $2,000 $1,000 $8.734 $8.915arrow_forwardAssume a $55,000 investment and the following cash flows for two alternatives. Year Investment A Investment B $ 15,000 $35,000 1 2 25,000 10,000 20,000 15,000 25,000 3 4 20,000 a. Calculate the payback for investment A and B. (Round your answers to 2 decimal places.) Investment A years Investment B years b. Which investment would you select under the payback method? O Investment A O Investment B c. If the inflow in the fifth year for Investment A was $20,000,000 instead of $20,000, would your answer change under the payback method? Yes O Noarrow_forwardA company has two investment possibilities, with the following cash inflows: Investment Year 1 Year 2 Year 3 A $1,000 1,400 1,800 B $1,700 1,700 1,700 If the firm can earn 6 percent in other investments, what is the present value of investments A and B? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar.PV(Investment A): $ __________PV(Investment B): $ __________ If each investment costs $4,000, is the present value of each investment greater than the cost of the investment? The present value of investment A is __less than___ / __greater than__ the cost. The present value of investment B is __less than___ / __greater than__ cost.arrow_forward
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Capital Budgeting Introduction & Calculations Step-by-Step -PV, FV, NPV, IRR, Payback, Simple R of R; Author: Accounting Step by Step;https://www.youtube.com/watch?v=hyBw-NnAkHY;License: Standard Youtube License