APPLY THE CONCEPTS: Internal rate of return The Sutherland purchasing department has made revisions to their costs and annual cash flows for Project A and Project B, as outlined below. Project A Project B Project A's revised investment is $217,300. The Project B's revised investment is $116,700. project's life and cash flow have changed to 6 The project's life and cash flow have changed years and $47,000, respectively, while expenses to 5 years and $85,000 while expenses have been eliminated. reduced slightly to $55,000. Compute the internal rate of return factor for Project A and Project B and then identify each project's corresponding percentage from the PV ordinary annuity table. Note: Enter the IRR factor, to 5 decimal places. Project A: The calculated IRR factor is and this value corresponds to which percentage in the present value of ordinary annuity table? % Project B: The calculated IRR factor is and this value corresponds to which percentage in the present value of ordinary annuity table? %

APPLY THE CONCEPTS: Internal rate of return The Sutherland purchasing department has made revisions to their costs and annual cash flows for Project A and Project B, as outlined below. Project A Project B Project A's revised investment is $217,300. The Project B's revised investment is $116,700. project's life and cash flow have changed to 6 The project's life and cash flow have changed years and $47,000, respectively, while expenses to 5 years and $85,000 while expenses have been eliminated. reduced slightly to $55,000. Compute the internal rate of return factor for Project A and Project B and then identify each project's corresponding percentage from the PV ordinary annuity table. Note: Enter the IRR factor, to 5 decimal places. Project A: The calculated IRR factor is and this value corresponds to which percentage in the present value of ordinary annuity table? % Project B: The calculated IRR factor is and this value corresponds to which percentage in the present value of ordinary annuity table? %

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 8P: Edelman Engineering is considering including two pieces of equipment, a truck and an overhead pulley...

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APPLY THE CONCEPTS: Internal rate of return The Sutherland purchasing department has made revisions to their costs and annual cash flows for Project A and Project B, as outlined below. Project A Project B Project A's revised investment is $217,300. The Project B's revised investment is $116,700. project's life and cash flow have changed to 6 The project's life and cash flow have changed years and $47,000, respectively, while expenses to 5 years and $85,000 while expenses have been eliminated. reduced slightly to $55,000. Compute the internal rate of return factor for Project A and Project B and then identify each project's corresponding percentage from the PV ordinary annuity table. Note: Enter the IRR factor, to 5 decimal places. Project A: The calculated IRR factor is 4.62340 v and this value corresponds to which percentage in the present value of ordinary annuity table? Project B: The calculated IRR factor is 3.89 V and this value corresponds to which percentage in the present value…
Information for two alternative projects involving machinery Investments follows. Project 1 requires an initial Investment of $256,500. Project 2 requires an initial Investment of $174,000. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income (a) Compute each project's annual net cash flow. (b) Compute payback period for each Investment. Required A Required B Compute each project's annual net cash flow. Complete this question by entering your answers in the tabs below. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Net cash flow $ $ Income Project 1 160,000 Project 1 $ 160,000 80,000 35,000 23,000 22,000 80,000 35,000 23,000 $ 22,000 Cash Flow $ $ Project 2 $ 140,000 47,000 33,000 35,000 $ 25,000 Income Project 2 140,000 47,000 33,000 35,000…
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A project has cash flows of -$35,000, $0, $10,000, and $42,000 for Years 0 to 3, respectively. The required rate of return is percent, you should the project. 15 percent. Based on the internal rate of return of O 24.76; accept O 13.96; accept O 14.92; reject O 15.21; accept A Click Submit to complete this assessment. Question 30 of 30 Save and Submit
A company is considering three alternative investment projects with different net cash flows. The present value of net cash flows is calculated using Excel and the results follow. Potential Projects Present value of net cash flows (excluding initial investment) Initial investment Project A $ 11,226 (10,000) Project B $ 10,568 (10,000) a. Compute the net present value of each project. b. If the company accepts all positive net present value projects, which of these will it accept? c. If the company can choose only one project, which will it choose on the basis of net present value? Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute the net present value of each project. Potential Projects Project A Project B Project C Present value of net cash flows Initial investment Net present value $ $ $
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