1a. Compute the cash payback period for each project. Cash Payback Period Plant Expansion Retail Store Expansion 1b. Compute the net present value. Use the present value of $1 table above. If required, round to the nearest dollar. Plant Expansion Retail Store Expansion Total present value of net cash flow Less amount to be invested Net present value

1a. Compute the cash payback period for each project. Cash Payback Period Plant Expansion Retail Store Expansion 1b. Compute the net present value. Use the present value of $1 table above. If required, round to the nearest dollar. Plant Expansion Retail Store Expansion Total present value of net cash flow Less amount to be invested Net present value

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Below is a table for the present value of $1 at compound interest. Year 6% 10% 12% 1 .943 .909 .893 2 .890 .826 .797 3 .840 .751 .712 4 .792 .683 .636 5 .747 .621 .567 Below is a table for the present value of an annuity of $1 at compound interest. Year 6% 10% 12% 1 .943 .909 .893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Using the tables above, what would be the present value of $15,000 (rounded to the nearest dollar) to be received three years from today, assuming an earnings rate of 6%? a.$12,600 b.$40,095 c.$14,145 d.$13,350
Complete the following without using Table12.1. (Round the "Total amount" and "Total interest" to the nearest cent.) Rate of Time Periods Rate Total amount Total interest compound interest Principal Compounded (years) 1,500 1 8% Quarterly Prev 1 of 18 Next > acer .. Σ %24
Determine the present value of the following single amounts: Future Amount Interest Rate No. of Periods1. $ 20,000 7% 102. 14,000 8 123. 25,000 12 204. 40,000 10 8
Net present value-unequal lives Project 1 requires an original investment of $50,100. The project will yield cash flows of $10,000 per year for 8 years. Project 2 has a computed net present value of $11,600 over a 6-year life. Project 1 could be sold at the end of 6 years for a price of $38,000. Use the Present Value of $1 at Compound Interest and the Present Value of an Annuity of $1 at Compound Interest tables shown below. Present Value of $1 at Compound Interest 6% 10% Year 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 0.943 0.890 0.840 0.792 0.747 7 0.705 0.665 0.627 0.592 0.558 0.943 1.833 2.673 3.465 4.212 4.917 0.909 5.582 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 0.909 1.736 2.487 3.170 3.791 4.355 12% 4.868 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.893 1.690 2.402 3.037 3.605 4.111 15% 4.564 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 0.870 1.626 2.283 2.855 3.353…
Present Value of Bonds Payable; Discount Pinder Co. produces and sells high-quality video equipment. To finance its operations, Pinder Co. issued $25,000,000 of five-year, 7% bonds, with interest payable semiannually, at a market (effective) interest rate of 9%. Determine the present value of the bonds payable, using the present value tables in Exhibit 8 and Exhibit 10. Round to the nearest dollar.
Solve the following problem using elther Table 11-1 or Table 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent) George Invests $12,875, at 6% interest, semiannually for 8 years. Calculate the compound amount for his investment. O $7,785.64 O $19,055.00 O $20,520.82 O $20,660.64
Tait is entering high school and is determined to save money for college. Tait feels he can save $2,500 each year for the next four years from his part-time job. If Tait is able to invest at 6%, how much will he have when he starts college? (Click the icon to view Present Value of $1 table.) E (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (Click the icon to view Future Value of $1 table.) E (Click the icon to view Future Value of Ordinary Annuity of $1 table.) - X Reference (Round your answer to the nearest dollar.) Reference When Tait starts college he will have Present Value of $1 Periods Period 1 Period 2 Period 3 Period 4 Period 5 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% Future Value of $1 0.990 0.980 0.971 0.962 0.952 0.943 0.980 0.961 0.943 0.925 0.907 0.971 0.942 0.915 0.889 0.864 0.840 0.961 0.924 0.888 0.855 0.823 0.792 0.951 0.906 0.863 0.822 0.784 0.747 0.917 0.909 0.893 | 0.877 0.870 0.862 0.847 0.833 0.826 0.797 0.769 0.756 0.743…
Crab Company is considering a project with an initial investment of $600,000 that is expected to produce cash inflows of $129,500 for ten years. Crab's required rate of return is 16%. (Click on the icon to view Present Value of $1 table.) E (Click on the icon to view Present Value of Ordinary Annuity of $1 table.) 14. What is the NPV of the project? 15. What is the IRR of the project? 16. Is this an acceptable project for Crab? 14. What is the NPV of the project? (Enter the factor amount to three decimal places, X.XXX. Round the present value of the annuity to the nearest whole dollar. Use parentheses or a minus sign for a negative net present value.) Net Cash Annuity PV Factor Present (i-16%, n=10) Value Years Inflow 1- 10 Present value of annuity Investment Net present value
TABLE 13.2 Present value of an annuity of $1 ½% 6% 7% 1% 0.9901 1.9704 2% 0.9804 3% 0.9709 4% 0.9615 0.9950 1.9851 1.9416 1.9135 1.8861 5% 0.9524 1.8594 2.7232 3.5459 4.3295 2.9702 2.9410 2.8839 2.7751 2.8286 3.7171 3.9505 3.9020 3.6299 4.9259 4.4518 3.8077 4.8534 4.7134 4.5797 5.7955 5.6014 6.7282 6.4720 5.8964 5.2421 6.8621 5.4172 6.2303 7.0197 6.0021 7.8230 7.6517 7.3255 8.7791 8.5660 7.7861 8.1622 8.9826 5.0757 5.7864 6.7327 6.4632 7.4353 7.1078 8.1109 7.7217 8.3064 8.8632 9.7304 9.4713 8.5302 10.6770 10.3676 9.7868 9.2526 8.7605 8% 0.9434 0.9346 0.9259 1.8334 1.8080 1.7833 2.6730 2.6243 2.5771 3.4651 3.3872 3.3121 4.2124 4.1002 3.9927 4.9173 4.7665 4.6229 5.5824 5.3893 5.2064 6.2098 5.9713 5.7466 6.8017 6.5152 6.2469 7.3601 7.0236 6.7101 7.8869 7.4987 7.1390 11.2551 10.5753 8.3838 7.9427 7.5361 12.1337 9.9856 8.8527 8.3576 7.9038 13.4887 13.0037 12.1062 11.2961 10.5631 9.8986 8.2442 14.4166 13.8650 12.8492 11.9379 11.1184 10.3796 9.7122 9.1079 8.5595 15.3399 14.7179 13.5777…
Net Present Value-Unequal Lives Project 1 requires an original investment of $88,600. The project will yield cash flows of $17,000 per year for six years. Project 2 has a calculated net present value of $23,200 over a four-year life. Project 1 could be sold at the end of four years for a price of $69,000. Use the Present Value of $1 at Compound Interest and the Present Value of an Annuity of $1 at Compound Interest tables shown below. Present Value of $1 at Compound Interest 12% Year 6% 10% 15% 20% 0.909 1 0.943 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 0.712 3 0.840 0.751 0.658 0.579 0.792 0.683 0.636 0.572 4 0.482 0.621 5 0.747 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 0.424 0.592 0.361 0.284 0.194 0.247 10 0.558 0.386 0.322 0.162
The investment committee of Sentry Insurance Co. is evaluating two projects, office expansion and upgrade to computer servers. The projects have different useful lives, but each requires an investment of $490,000. The estimated net cash flows from each project are as follows: Year 1 2 Year 3 4 5 The committee has selected a rate of 12% for purposes of net present value analysis. It also estimates that the residual value at the end of each project's useful life is $0, but at the end of the fourth year, the office expansion's residual value would be $180,000. 6 7 8 9 10 1 1 2 3 2 4 5 6 3 0.943 0.890 0.840 Present Value of $1 at Compound Interest 6% 10% 12% 0.792 0.747 0.705 0.665 0.627 0.592 0.558 Net Cash Flows Office Expansion $125,000 125,000 125,000 125,000 125,000 125,000 0.943 1.833 2.673 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 Net Cash Flows Servers $165,000 165,000 165,000 165,000 0.909 1.736 2.487 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322…
The investment committee of Sentry Insurance Co. is evaluating two projects, office expansion and upgrade to computer servers. The projects have different useful lives, but each requires an investment of $490,000. The estimated net cash flows from each project are as follows: Year 1 1 2 3 4 2 Year 5 6 3 7 8 9 10 4 The committee has selected a rate of 12% for purposes of net present value analysis. It also estimates that the residual value at the end of each project's useful life is $0, but at the end of the fourth year, the office expansion's residual value would be $180,000. 5 6 0.943 0.890 0.840 Present Value of $1 at Compound Interest 6% 10% 0.792 0.747 0.705 0.665 0.627 Net Cash Flows Office Expansion $125,000 125,000 125,000 125,000 125,000 125,000 0.592 0.558 0.909 0.826 0.751 0.683 0.621 0.564 0.513 Net Cash Flows Servers 0.467 $165,000 165,000 165,000 165,000 0.424 0.386 12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 15% 0.870 0.756 0.658 0.572 0.497 0.432…

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