Beam Cable Company is considering investing $450,000 in telecommunications equipment that has an estimated life of four years with no residual value. The cash inflows are as shown below: Year 1 2 3 4 The present value of $1: 10% A 1 $120,000 235,000 140,000 98,000 23 11% 0.909 0.901 0.826 0.812 0.751 0.731 between 9% and 10% 12% 0.893 0.797 0.712 13% 0.885 0.783 0.693 14% 0.877 0.769 0.675
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- Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the following cash flows over the next five years: $99,000, $88,000, $92,000. $87,000, and $72,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel. see Appendix C.Gallant Sports s considering the purchase of a new rock-climbing facility. The company estimates that the construction will require an initial outlay of $350,000. Other cash flows are estimated as follows: Assuming the company limits its analysis to four years due to economic uncertainties, determine the net present value of the rock-climbing facility. Should the company develop the facility if the required rate of return is 6%?Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and provide the following cash flows over the next five years: $88,000, 92,000, $91,000, $72,000, and $71,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel, see Appendix C.
- Giant Machinery Ltd is considering investing in one of the two following Projects to buy newequipment. Each project will last 5 years and have no salvage value at the end. The company’s requiredrate of return for all investment projects is 9%. The cash flows of the projects are provided below.Project 1 Project 2Cost $175,000 $185,000Future Cash FlowsYear 1Year 2Year 3Year 4Year 576,00083,00067,00065,00055,00087,00078,00069,00065,00057,000Required:a) Identify which project should the company accept based on the NPV method. (Note: Please round up the result of each calculation of PV to 2 decimal places only for simplification)b) Identify which project should the company accept based on the simple payback method if thepayback criteria is a maximum of 2 years. c) Which project Giant Machinery should choose if two methods are in conflict.Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow -$ 30,000 012345 12,200 14,900 16,800 13,900 -10,400 The company uses an interest rate of 8 percent on all of its projects. Calculate the MIRR of the project. (Do not round intermediate calculation your answer as a percent rounded to 2 decimal places, e.g., 32.16.) MIRR %"It is estimated that a certain piece of equipment can save $16820 per year in labor and materials costs. The equipment has an expected life of 6 years and no market value. If the company must earn a 4.77% annual return on such investments, how much could be justified now for the purchase of this piece of equipment? Draw a cash-flow diagram from the company s viewpoint." A) 157789.82 B 86004.7 C 154892.87 D 128687.86 E 178326.02
- The management of Advanced Alternative Power Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows: Year Wind Turbines Biofuel Equipment 1 $160,000 $320,000 2 160,000 320,000 3 160,000 320,000 4 160,000 320,000 Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.352 2.991 6 4.917 4.355 4.111 3.784 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 The wind turbines require an investment of $456,800, while the biofuel equipment requires an investment of $971,840. No residual value is expected from either project. Required: 1a. Compute the net present value for each project. Use a rate of 10% and the present…Solo Corp, is evaluating a project with the following cash flows: Cash Flow -$28,200 10,400 Year 0 12440 3 5 13,100 15,000 12,100 8,600 The company uses a discount rate of 11 percent and a reinvestment rate of 8 percent on all of its projects. MIRR Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) %The management of Advanced Alternative Power Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows: Year Wind Turbines Biofuel Equipment 1 $310,000 $620,000 2 310,000 620,000 3 310,000 620,000 4 310,000 620,000 Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.352 2.991 6 4.917 4.355 4.111 3.784 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 The wind turbines require an investment of $802,590, while the biofuel equipment requires an investment of $1,770,100. No residual value is expected from either project. Required: 1a. Compute the net present value for each project. Use a rate of 10% and the present…
- Juniper Corporation is considering two alternative investment proposals with the following data: Proposal X Proposal Y Investment $810,000 $466,000 Useful life 8 years 8 years Estimated annual net cash inflows for 8 years $130,000 $70,000 Residual value $58,000 $− Depreciation method Straight−line Straight−line Required rate of return 13% 10% What is the accounting rate of return for Proposal X? (Round any intermediary calculations to the nearest dollar, and round your final answer to the nearest hundredth of a percent, X.XX%.)Davis Chili Company is considering an investment of $37,000, which produces the following inflows: Year Cash Flow $17,000 16, 000 13,000 1 2 Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Determine the net present value of the project based on a zero percent discount rate. Net present value b. Determine the net present value of the project based on a 10 percent discount rate. (Do not round intermediate calculations and round your answer to 2 decimal places.) Net present value c. Determine the net present value of the project based on a 16 percent discount rate. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.) Net present valueThe management of Advanced Alternative Power Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows: Year Wind Turbines Biofuel Equipment 1 $310,000 $650,000 2 310,000 650,000 3 310,000 650,000 4 310,000 650,000 Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.352 2.991 6 4.917 4.355 4.111 3.784 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 The wind turbines require an investment of $885,050, while the biofuel equipment requires an investment of $1,974,050. No residual value is expected from either project. Required: 1a. Compute the net present value for each project. Use a rate of 10% and the present…
