Elysian Fields, Inc., uses a maximum payback period of 6 years and currently must choose between two mutually exclusive projects. Project Hydrogen requires an initial outlay of $31,000; project Helium requires an initial outlay of $35,000. Using the expected cash inflows given for each project in the following table,, calculate each project's payback period. Which project meets Elysian's standards? The payback period of project Hydrogen is years. (Round to two decimal places.) Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Year 1 2 3 4 5 Expected cash inflows Hydrogen Helium $7,000 $6,000 $7,000 $6,500 $7,500 $9,000 $4,000 $6,000 $3,500 $5,500 $3,000 $5,000 X

Elysian Fields, Inc., uses a maximum payback period of 6 years and currently must choose between two mutually exclusive projects. Project Hydrogen requires an initial outlay of $31,000; project Helium requires an initial outlay of $35,000. Using the expected cash inflows given for each project in the following table,, calculate each project's payback period. Which project meets Elysian's standards? The payback period of project Hydrogen is years. (Round to two decimal places.) Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Year 1 2 3 4 5 Expected cash inflows Hydrogen Helium $7,000 $6,000 $7,000 $6,500 $7,500 $9,000 $4,000 $6,000 $3,500 $5,500 $3,000 $5,000 X

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 10E: Roberts Company is considering an investment in equipment that is capable of producing more...

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Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects’ NPVs, IRRs, MIRRs, and PIs, assuming a cost of capital of 12%. Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should actually be selected?
Markoff Products is considering two competing projects, but only one will be selected. Project A requires an initial investment of $42,000 and is expected to generate future cash flows of $6,000 for each of the next 50 years. Project B requires an initial investment of $210,000 and will generate $30,000 for each of the next 10 years. If Markoff requires a payback of 8 years or less, which project should it select based on payback periods?
There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows: If the discount rate is 12%, compute the NPV of each project.
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In an unrelated analysis, you have the opportunity to choose between the following two mutually exclusive projects, Project T (which lasts for 2 years) and Project F (which lasts for 4 years): The projects provide a necessary service, so whichever one is selected is expected to be repeated into the foreseeable future. Both projects have a 10% cost of capital. (1) What is each projects initial NPV without replication? (2) What is each projects equivalent annual annuity? (3) Apply the replacement chain approach to determine the projects extended NPVs. Which project should be chosen? (4) Assume that the cost to replicate Project T in 2 years will increase to 105,000 due to inflation. How should the analysis be handled now, and which project should be chosen?
There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows: Use the information from the previous exercise to calculate the internal rate of return on both projects and make a recommendation on which one to accept. For further instructions on internal rate of return in Excel, see Appendix C.
There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment or $28.000 and is expected to generate the following cash flows: If the discount rate is 5% compute the NPV of each project and make a recommendation of the project to be chosen.
Roberts Company is considering an investment in equipment that is capable of producing more efficiently than the current technology. The outlay required is 2,293,200. The equipment is expected to last five years and will have no salvage value. The expected cash flows associated with the project are as follows: Required: 1. Compute the projects payback period. 2. Compute the projects accounting rate of return. 3. Compute the projects net present value, assuming a required rate of return of 10 percent. 4. Compute the projects internal rate of return.
Elysian Fields, Inc., uses a maximum payback period of 6 years and currently must choose between two mutually exclusive projects. Project Hydrogen requires an initial outlay of $28,000; project Helium requires an initial outlay of $34,000. Using the expected cash inflows given for each project in the following table, . calculate each project's payback period. Which project meets Elysian's standards? The payback period of project Hydrogen isOyears. (Round to two decimal places.) i Data Table (Cick on the icon here e in order to copy the contents of the data table below into a spreadsheet.) Expected cash inflows Hydrogen Year Helium $6,500 $8,000 $5,000 $8,500 $8,000 $7,000 2 3 $3,000 $4,500 $3,500 $5,000 6 $2,500 $4,000 Print Done
Elysian Fields, Inc., uses a maximum payback period of 6 years and currently must choose between two mutually exclusive projects. Project Hydrogen requires an initial outlay of $26,000; project Helium requires an initial outlay of $35,000. Using the expected cash inflows given for each project in the following table, E, calculate each project's payback period. Which project meets Elysian's standards?
Elysian Fields, Inc., uses a maximum payback period of 6 years and currently must choose between two mutually exclusive projects. Project Hydrogen requires an initial outlay of $30,000; project Helium requires an initial outlay of $34,000. Using the expected cash inflows given for each project in the following table, E, calculate each project's payback period. Which project meets Elysian's standards? The payback period of project Hydrogen is years. (Round to two decimal places.) Data Table (Click on the icon here D in order to copy the contents of the data table below into a spreadsheet.) Expected cash inflows Year Hydrogen $7,000 $5,500 $8,000 $4,000 $4,000 $2,500 Helium $7,000 $8,000 $7,000 $5,000 $6,000 $4,500 1 3 4 5 Print Done
Elysian Fields, Inc., uses a maximum payback period of 6 years and currently must choose between two mutually exclusive projects. Project Hydrogen requires an initial outlay of $28,000; project He requires an initial outlay of $33,000. Using the expected cash inflows given for each project in the following table, 1, calculate each project's payback period. Which project meets Elysian's standards The payback period of project Hydrogen is years. (Round to two decimal places.) The payback period of project Helium is years. (Round to two decimal places.) Which project meets Elysian's standard? (Select the best answer below.) Only project Hydrogen meets Elysian's standard. O Only project Helium meets Elysian's standard. Both projects are acceptable because their payback periods are less than the 6 years criterion.