$1897 mibns 000,0062 sw I Y al coles a bl 6) The Kaufmann Group is considering a $364,000 investment with the following net cash flows. Kauffman requires a 12% return on its investments. Annual Net Cash Flows Present Value of $1 at 12% Initial investment 1.0000 Year 1 $ 124,000 0.8929 Year 2 84,000 0.7972 Year 3 144,000 0.7118 Year 4 s istos bas 000,00 254,000 svenistot 008,20 0.6355 by Year 5 74,000 0.5674 The present value of this investment is: A) B) C) D) E) $483,588. $161,576. $119,5
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$1897 mibns 000,0062 sw I Y al coles a bl 6) The Kaufmann Group is considering a $364,000 investment with the following net cash flows. Kauffman requires a 12%
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- Following is information on two alternative investments being considered by Tiger Co. The company requires a 8% return from its investments. Project X1 Project X2 Initial investment $ (128,000 ) $ (216,000 ) Expected net cash flows in: Year 1 49,000 96,000 Year 2 59,500 86,000 Year 3 84,500 76,000A firm has the following investing alternative: Cash Inflows Year A B C 1 $1,100 $3,600 -- 2 1,100 -- -- 3 1,100 -- $4,562 Each investment costs $3,000; investments B and C are mutually exclu- sive, and the firm’s cost of capital is 8 percent. a. What is the net present value of each investment? b. According to the net present values, which investment(s) should the firm make? Why? c. What is the internal rate of return on each investment? d. According to the internal rates of return, which investment(s) should the firm make? Why? e. According to both the net present values and internal rates of return, which…1 Moore is considering a $180,000 investment with the following net cash flows. Moore requires a 10% return on its investments. Calculate the NPV and IRR below. In the dropdown box, select whether each indicates whether Moore should accept the investment. 2 3 Year 4 Initial investment 5 1 6 7 8 9 10 11 12 13 14 15 NPV 16 17 IRR 18 19 20 2 4 5 Net Cash Flows (180,000) 60,000 40,000 70,000 125,000 35,000
- -ollowlng Is Information on two alternative Investments belng considered by Jolee Company. The company requires a 10% return from Its Investments. Project A $(196,000) Project B $(141, 000) Initial investment Expected net cash flows in: Year 1 49,000 65,000 89,295 41,000 59,000 75, 000 75,000 75,000 Year 2 Year 3 Year 4 99,400 74,000 Year 5 Compute the Internal rate of return for each of the projects using excel functlons. (Round your answers to 2 declmal places.) IRR Project A % Project B < Prev 9 of 9 Next L Type here to search F11 F1 F6 F7 F8 F9 F10 F2 F3 F4 F5 F1 23 1 2 4. 7 8 T Y U P G K S C N M B EIConsider an investment with the following cash flows: Year Cashflows PV of P 1 @ 14% 0 (P 31,000) 1.000 1 10,000 .877 2 20,000 .770 3 10,000 .675 4 10,000 .592 Salvage value 5,000 The cost of capital is 14%. What is the profitability index (PI)? a. 1.842 b. 1.824 c. 1.482 d. 1.284J&R Wealth is considering an investment with the following cash flow: FOY Cash Flow 1-10 10 $500,000 $92,500/year $50,000 If MARR is 12%, what is the ERR? Is this project acceptable?
- 6. Joliet Company is considering two alternative investments. The company requires an 18% return from its investments. Category Initial Investment Net cash flows anticipated: Year 1 Year 2 Year 3 Year 4 Year 5 Project X 108,000 36,000 39,000 32,000 34,000 25,000 Compute the IRR for both Projects and recommend one of them. Project Y $98,000 25,000 45,000 42,000 28,000 17,000Fuente, Incorporated, has identified an investment project with the following cash flows. Cash Flow $700 925 1,125 1,250 Year 1 2 3 4 a.lf the discount rate is 11 percent, what is the future value of these cash flows in year 4? Future value at 11% b.What is the future value at a discount rate of 18 percent? Future value at 18%Consider a project that has an initial outlay of $1,200. The firm's cost of capital is 10%. The expected cash flows are: Year 1 = $550 Year 2= $560 Year 3 = $790 What is the net present value for the project? OA. $200.15 OB. $480.00 OC. $356.35 O D. $191.06
- Consider an investment with the following cash flows: Year Cashflows PV of P 1 @ 14% 0 (P 31,000) 1.000 1 10,000 .877 2 20,000 .770 3 10,000 .675 4 10,000 .592 Salvage value 5,000 The cost of capital is 14%. What is the profitability index (PI)? 1.842 1.824 1.482 1.284Two mutually exclusive investment opportunities require an initial investment of $8 million Investment A then generates $1.70 million per year in perpetuity, while investment B pays $1.00 million in the first y with cash flows increasing by 5% per year after that. At what cost of capital would an investor regard both opportunities as being equivalent? O A. 13% OB. 12% OC. 6% OD. 3%Baltusrol Inc. has the following three investment opportunities. A P70,000 10,000 B Initial investment Initial working capital required Cash inflows by year: Year 1 P70,000 5,000 P70,000 8,000 P35,000 35,000 10,000 5,000 8,000 P83.000 P1,250 P35,000 10,000 45.000 20,000 2,000 P112.000 P10,000 P4,000 8,000 10,000 98,000 5.000 P125.000 P12,500 Year 2 Year 3 Year 4 Released working capital Total Average annual income Required: 1. Rank the investment opportunities in order of desirability using. A. Payback period. B. Average book rate of return (use average net book value of the investment as the denominator), and C. NPV using a 16% discount rate. 2. Determine the profitability index for each opportunity and rank the investments based on these values.