$8,000Year 1$4,000$8,000Year 2$9,000$8,000Year 3$8,000Year 4$8,000$20,000 $15,000 $10,000 $5,000Net Cash Flows (Stout)*+ableauYear 5$13,000$20,000$18,000$0БО$5,000 $10,000 $15,000 $20,000Net Cash Flows (Boise)1. Compute the net present value of each project.2. Based on net present values, which project(s) should the company Invest In?3. Compute the profitability Index for each project. If the company can select only one project, which should it choose on the basis oprofitability Index?Complete this question by entering your answers in the tabs below.Required 1Required 2Required 3Compute the net present value of each project.StoutYear 1Year2Year 3Year 4Year 5TotalsInitial investmentNet present valueBoiseYear 1Year 2Year 3Year 4Year 5TotalsInitial investmentNet present valuePresent Value of 1Present Value ofNet Cash Flowsat 12%Net Cash Flows

The objective of the question is to calculate the net present value (NPV) and profitability index…

Answered: $8,000 Year 1 $4,000 $8,000 Year 2…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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.
Payback Machine X Cumulative cash flow Machine Y Cumulative cash flow Investment 1,000,000 1,000,000 (1,000,000) (1,000,000) Year 1 $500,000 (500,000) $200,000 (800,000) Year 2 $500,000 0 $300,000 (500,000) Year 3 $300,000 $500,000 0 Year 4 $100,000 $500,000 Payback 2 years 3 years ARR Machine X ARR = Average Profit Average investment Therefore: Depreciation (1000, 000-200,000) /4 = 200000 = 200,000X 4 = 800,000 Profits before depreciation 1400,000 Less depreciation (800,000) Accounting Profit 600,000 Average profits 600,000/4yrs =150,000 Average investment = (initial investment + residual value)/2 = (1,000,000 + 200,000)/2 = 600,000 (Average profit/ average investment) X 100 = (150,000/600,000) X 100 = 25% Machine Y…
uestion 3 4 Successfully signed in as bhaliyakanti061998. Max. score: 1.C The cash outflow for the initial year (year 0) is $100,000. Afterwards the cash flows are $50,000, $20,000 and $10,000 for the year 1 to 3 respectively. The IRR would be? 50% -50% x+2=x-1 .. 2 = -1 જે શક્ય નથી. : 1 & Rf હું વ્યાપ્ત નથી. fI વ્યાખ્યાયિત નથી. (D) ઉકેલ શક્ય નથી. Shot on OnePlus s.s. bhaliya
All techniques, conflicting rankings Nicholson Roofing Materials, Inc., is considering two mutually exclusive projects, that both cost $130,000. The company's board of directors has set a 4-year payback requirement the cost of capital is 7%. The project cash flows are shown in the following table: a. Calculate the payback period for each project. Rank the projects by payback period. b. Calculate the NPV of each project. Rank the project by NPV. c. Calculate the IRR of each project. Rank the project by IRR. d. Make a recommendation. a. The payback period of project A is 2.89 years. (Round to two decimal places.) The payback period of project B is 1.64 years. (Round to two decimal places.) According to the payback method, which project should the firm choose? (Select the best answer below.) A. Project B B. Project A b. The NPV of project A is $. (Round to the nearest cent.)
Look at the cash flows for projects F and G given below. Cash Flows ($) Project Co F G NPV IRR at C4 C6 C7 Cg C1 C2 C3 (6,000) 4,400 4,400 4,400 ( % ) 10% 52.8 4,942 0 0 0 0 (6,000) 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 32.9 5,737 Project F Project G The cost of capital was assumed to be 10%. Assume that the forecasted cash flows for projects of this type are overstated by 8% on average. That is, the forecast for each cash flow from each project should be reduced by 8%. But a lazy financial manager, unwilling to take the time to argue with the projects' sponsors, instructs them to use a discount rate of 18%. a. What are the projects' true NPVs? (Do not round intermediate calculations. Round your answers to nearest dollar amount.) Project F Project G NPV at 10% C5 0 b. What are the NPVs at the 18% discount rate? (Do not round intermediate calculations. Round your answers to nearest dollar amount.) NPV at 18%
Provided information Cash flow Million Interest Cash flow Year rate Million 12% R-638 R-638 1 12% R160 R160 2 12% R200 R200 3 12% R200 R200 4 12% R200 R200
Look at the cash flows for projects F and G given below. Cash Flows ($) NPV IRR at Project со F G C1 C2 C3 C4 (15,000) 7,200 7,200 7,200 Ө (15,000) 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 17.3 4,206 C5 C6 C7 Cg (%) 10% 0 Ө Ө Ө 20.7 2,905 The cost of capital was assumed to be 10%. Assume that the forecasted cash flows for projects of this type are overstated by 7% on average. That is, the forecast for each cash flow from each project should be reduced by 7%. But a lazy financial manager, unwilling to take the time to argue with the projects' sponsors, instructs them to use a discount rate of 17%. a. What are the projects' true NPVs? (Do not round intermediate calculations. Round your answers to nearest dollar amount.) Project F Project G NPV at 10% b. What are the NPVs at the 17% discount rate? (Do not round intermediate calculations. Round your answers to nearest dollar amount.) Project F Project G NPV at 17%
1 calculate the net present in A4 of the following cash flow stream shown in AS through LogGbeint the required rate is 12% Mary Slap yearry On 12304 5. Cash Flow (230,000) 60,000 60,000 60.000 60.000 60.000 NPV calculation: 2014 Yorker 20111 on ELL PA 1912 H H 2010005 $1914:00p Is this a good project for the business to accept? OG SOLCE
Year Investment $13,000 $10,000 Cash Inflow $1,000 $2,000 $2,500 $4,000 $5,000 $4,000 $5,000 $4,000 $3,000 $2,000 Determine the Payback Period. 1234567899
Year Cash Flow $275.000 1 $35.00 2 S65,000 36 S25.000 $13500 $185.000 9-20 $245,000 Given the following cash flows and if MARR-24%? Ans xx What is the Simple Payback Period? Ans XX What is the Discounted Payback Penod? 01 7 8.
e to search ☐ shaikh amir - Easy E... Texas Department o Inspectors Depart... A Does an MIS make i... Question 10 What is the IRR of Project C if the outlay is $225,000 and the after-tax cash inflows for years one through four are: $45,000, $70,000, $80,000, and $105,000? O 13.21% O 12.90 11.00 O 11.80 O 13.53. D Question 11 What is the NPV of Project C? $4,274.96 1,138.33 O3.891.33 2,884.34 O2.638.33 Question 12 Based on IRR. ABC should accept all throe only A and B only A and C only C a
Internal rate of return and modified internal rate of return. Quark Industries has three potential projects, all with an initial cost of $2,100,000. Given the discount rate and the future cash flow of each project in the following table, E, what are the IRRS and MIRRS of the three projects for Quark Industries?

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