Maggie's Resorts expansion project to increase the number of bungalows on its property had the following information: Maggie's Resorts Initial Investment $7,954,000 Residual Value $1,046,000 Average annual cash inflow $1,257,900 Discount rate 10% Useful life of expansion in years 15
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Maggie's Resorts expansion project to increase the number of bungalows on its property had the following information:
Maggie's Resorts
Initial Investment | $7,954,000 |
---|---|
Residual Value | $1,046,000 |
Average annual |
$1,257,900 |
Discount rate | 10% |
Useful life of expansion in years | 15 |
Step by step
Solved in 3 steps
- Determine the ERR (External rate of return) of the cash flows if external rate (e) is given as %12. Cash Flow Year 0 1 2 3 4 5 6 7 Select one: a.0.228861 b.0.204146 c.0.245007 d.0.274516 e.0.181262 f.0.168017 g.0.19667 h.0.264278 -5000 2000 4000 -1500 3000 4000 -6000 9000Direction: Define, draw the cash flow diagram, and write the general formula of the following: ANNUITY 1. Ordinary Annuity a) Sum/Future of Ordinary Annuity b) Present Worth of Ordinary Annuity 2. Annuity Due 3. Deferred Annuityie Give an expression for the value, at the given valuation date, of the cash flow shown. 12 12 12 12 12 12 annual effeatrme years 8 nate : i ur
- Define effective annual rate (EAR) with examples. Differentiate between annuity cash flows and mixed stream with exampleExercise 24-12 (Algo) Net present value, unequal cash flows, profitability index, and service company LO P3 Following is information on two alternative investments. Beachside Resort is considering building a new pool or spa. The company requires a 6% return from its investments. (PV of $1. FV of $1. PVA of $1. and EVA of $1) (Use oppropriate factor(s) from the tables provided.) Initial investment Net cash flows in: Reg A a. For each investment project compute the net present value. b. For each investment project compute the profitability index. c. If the company can only select one project, which should it choose on the basis of profitability index? Pool Year 1 Year 21 Year 3 Year 4 Year 5 Complete this question by entering your answers in the tabs below. Year 1 Year 2 Year 3 Year 4 Year 5 Totals Pool Spa $ (177,325) $ (159,960) Spa 49,000 46,000 74,295 82,400 72,000 Req B and C For each investment project compute the net present value. 26,000 46,000 68,000 73,000 29,000 Net Cash Flows…FIND(x) FOR THE SHOWN CASH-FIOW DIAGRMS USE:i=9% 50 G=508 12 X 3 4
- Determine the ERR (External rate of return) of the cash flows if external rate (e) is given as %19. Year Cash Flow 0 -3000 1 2000 2 4000 3 -1000 4 3000 5 4000 6 -5000 7 9000 Select one: a. 0.2988 b. 0.2638 c. 0.2565 d. 0.3073 e. 0.2783 f. 0.3491A project is being analyzed with the following set of cash flows. Calculate the internal rate of return (IRR). (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cash Year Flow 0 16,000 123 6,700 8,000 6,500 IRR %Consider end-of-year cash flows for $8000, $15000, $2200O, $29000, and $36000 for years 1 to 5. If the series of cash flows is to be split into a uniform series and a uniform gradient, what is the uniform [ Select ] annuity amount A? If the series of cash flows is to be split into a uniform series and a [ Select ] uniform gradient, what is the uniform gradient amount G? What is the uniform annual [ Select ] equivalent if the interest rate is 12% per year? What is the future equivalent if the [ Select ] interest rate is 12% per year? What is the present equivalent if the [ Select ] interest rate is 12% per year?
- 7. Consider the following table for the cash flows of an investment account: Time mm/dd/yy 01/01/2015 04/01/2015 08/01/2015 12/31/2015 Contribution -300 +2,000 (a) Calculate the TWRR and the DWRR of the fund. (b) Comment on the results. Fund value before contribution 1,000 500 250 2,800Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal place.)Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash Flow (Y) 0 -24,063 -24,063 1 10,320 12,063 2 10,900 9,360 3 10,800 10,400 Sketch the NPV profiles for X and Y over a range of discount rates from zero to 25 percent (take 0%, 5%, 10%, 15%, 20%, 25%). Calculate the IRR of the projects. What is the relationship between NPV and IRR for your values? What is the crossover rate for these two projects and what it indicates for your values? Note - answer all the parts of the question.