Problem 5-7 Calculating Profitability Index Vince plans to open a self-serve grooming center in a storefront. The grooming equipment will cost $425,000, to be paid immediately. Vince expects aftertax cash Inflows of $92,000 annually for eight years, after which he plans to scrap the equipment and retire to the beaches of Nevis. The first cash Inflow occurs at the end of the first year. Assume the required return is 12 percent. What is the project's PI? (Do not round Intermediate calculations. Round your answer to 3 decimal places, e.g., 32.161.) PI

Problem 5-7 Calculating Profitability Index Vince plans to open a self-serve grooming center in a storefront. The grooming equipment will cost $425,000, to be paid immediately. Vince expects aftertax cash Inflows of $92,000 annually for eight years, after which he plans to scrap the equipment and retire to the beaches of Nevis. The first cash Inflow occurs at the end of the first year. Assume the required return is 12 percent. What is the project's PI? (Do not round Intermediate calculations. Round your answer to 3 decimal places, e.g., 32.161.) PI

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter9: Capital Budgeting Techniques

Section: Chapter Questions

Problem 12PROB

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Current Attempt in Progress Sandhill Corp. management is planning to convert an existing warehouse into a new plant that will increase its production capacity by 45 percent. The cost of this project will be $9,965,338. It will result in additional cash flows of $2,080,200 for the next eight years. The discount rate is 13.19 percent. Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values you've been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.) a. What is the payback period? (Round answer to 2 decimal places, e.g. 15.25) The project's payback period is years b. What is the NPV for this project? (Round intermediate calculations and final answers to 0 decimal places, e.g. 1,251. Do not round…
Problem 5-7 Calculating Profitability Index Vince plans to open a self-serve grooming center in a storefront. The grooming equipment will cost $480,000, to be paid immediately. Vince expects aftertax cash inflows of $103,000 annually for eight years, after which he plans to scrap the equipment and retire to the beaches of Nevis. The first cash inflow occurs at the end of the first year. Assume the required return is 13 percent. What is the project's Pl? (Do not round intermediate calculations. Round your answer to 3 decimal places, e.g., 32.161.) IPI
Part 1 You have P10,000 to invest. You do not want to take any risk, so you will put the funds in a savings account at the local bank. Of the following choices, which one will produce the largest sum at the end of 22 years? An account that compounds interest. please explain 1.1 Annually 1.2 Daily 1.3 Quarterly 1.4 Monthly 2. The company is setting aside funds to acquire a property for its new warehouse. The company needs P74,735 to make the down payment. The company deposits P5,000/month in the fund account which pays 1% per month. As the financial manager you have been tasked to determine how long it will take to accumulate enough funds to acquire the property? 3. Suppose you are 40 years old and plans to retire in exactly 20 years. Twenty one years from now you will need to withdraw P50,000 per year from your retirement fund to add to your SSS pension. Assume you are to live for 85 years, how much money should you place in the retirement fund each year for the next 20…
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Week 7 Giant Machinery Ltd is considering to invest in one of the two following Projects to buy a new equipment. Each project will last 5 years and have no salvage value at the end. The company’s required rate of return for all investment projects is 9%. The cash flows of the projects are provided below. Project 1 Project 2 Cost $175,000 $185,000 Future Cash flow Year1 76,000 87,000 Year2 83,000 78,000 Year3 67,000 69,000 Year4 65,000 65,000 Year5 55,000 57,000 Required: a) Identify which project should the company accept based on NPV method. (Note: Please round up the result of each calculation of PV to 2 decimal places only for simplification) b) Identify which project should the company accept based on simple pay back method if the payback criteria is maximum 2 years. c) Which project Giant Machinery should choose if two methods are in conflict.
Accounting Rate of Return WeCare Clinic is planning on investing in some new echocardiogram equipment that will require an initial outlay of $155,000. The system has an expected life of five years and no expected salvage value. The investment is expected to produce the following net cash flows over its life: $74,000, $89,000, $91,000, $90,000, and $105,000. Required: 1. Calculate the annual net income for each of the five years. Net Income Year 1 $ 43,000 Year 2 $ 58,000 Year 3 $ 60,000 $ Year 4 Year 5 59,000 74,000 2. Calculate the accounting rate of return. Enter your answer as a whole percentage value (for example, 16% should be entered as "16"). 38 % 3. What if a second competing revenue-producing investment has the same initial outlay and salvage value but the following cash flows (in chronological sequence): $105,000, $105,000, $105,000, $74,000, and $30,000? Calculate its accounting rate of return. Enter your answer as a whole percentage value (for example, 16% should be entered…
Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?
If a copy center is considering the purchase of a new copy machine with an initial investment cost of $150,000 and the center expects an annual net cash flow of $20,000 per year, what is the payback period?
18 Bruce is considering the purchase of a restaurant named Hard Rock Hollywood. With the help of his accountant, Bruce projects the net cash flows (cash inflows less cash outflows) from the restaurant to be the following amounts over the next 10 years: Years 1 to 6 7 8 9 10 Amount $80,000 (each year) 90,000 100,000 110,000 120,000 Bruce expects to sell the restaurant after 10 years for an estimated $1,100,000. (EV of $1. PV of $1. FVA of $1. and PVA of $1) (Use tables, Excel, or a financial calculator. Round your answer to 2 decimal places.) Required: 1-a. Calculate the total present value of the net cash flows if Bruce wants to make at least 10% annually on his investment. (Assume all cash flows occur at the end of each year. Be sure to include the selling price in your calculation.) 1-b. Assuming the restaurant is listed for sale at $1,050,000, should he purchase the restaurant? Complete this question by entering your answers in the tabs below. Reg 1A Req 18 Calculate the total…
12. I need help with finance home work question asap please An investment that would require an initial cash outflow of $360,000 at the beginning is expected to produce cash inflows of $70,000 at the end of each of the investment's 7 years. Assume the required return is 13% and you wanted to determine the investment's discounted paypack period. What amount would you subtract from the investment's initial cash outflow of $360,000 when determining how much of the initial cost would be left to recover on a discounted basis at the beginning of the second year?
Solve and Draw the Cash Flow Diagram Lourdes has just retired and plans to consume $11093 from the retirement account every year for the next 11 years starting one year from today, meeting the rest of the expenses from other resources. If the annual interest rate is 9.6% compounded semiannually, how much does Lourdes have in the retirement account today?
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