2- Given the information in Table and 15 percent cost of capital,(a)compute the net present value.(b)should the project be accepted?Operating Cash Inflows$50,000$25,000$10,000$10,000$10,000$60,000-$100,000(Initial out lay)

Cost of Capital: It refers to the minimum cost or rate that is required by a company from a…

Answered: 2- Given the information in Table and…

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 22E

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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?
The Pinkerton Publishing Company is considering two mutually exclusive expansion plans. Plan A calls for the expenditure of 50 million on a large-scale, integrated plant that will provide an expected cash flow stream of 8 million per year for 20 years. Plan B calls for the expenditure of 15 million to build a somewhat less efficient, more labor-intensive plant that has an expected cash flow stream of 3.4 million per year for 20 years. The firms cost of capital is 10%. a. Calculate each projects NPV and IRR. b. Set up a Project by showing the cash flows that will exist if the firm goes with the large plant rather than the smaller plant. What are the NPV and the IRR for this Project ? c. Graph the NPV profiles for Plan A, Plan B, and Project .
Redbird Company is considering a project with an initial investment of $265,000 in new equipment that will yield annual net cash flows of $45,800 each year over its seven-year life. The companys minimum required rate of return is 8%. What is the internal rate of return? Should Redbird accept the project based on IRR?
If current assets are $100,000 and current liabilities are $42,000, what is the working capital? A. 200 percent B. 50 percent C. 2.0 D. $58,000
What is the minimum cash flow that could be received at the end of year 3 to make the following project "acceptable"? Initial cost = $100,000; cash flows at end of years 1 and 2 = $35,000; opportunity cost of capital = 8% a) $39,256.2 b) $47,347.2 c) $29,494.5 d) $37,250.5
Calculate the following project, at cost of capital of 10%. Years Cash flow (RM) 0 -10,000 1 2,000 2 2,000 3 4,000 4 4,000 5 5,000 i) NPVii) PIiii) Justified should we accept or reject the project?
Calculate the following project, at cost of capital of 10% Years Cash flow (RM) 0 -10,000 1 2,000 2 2,000 3 4,000 4 4,000 5 5,000 1. NPV 2. PI 3. Justify. Should the project be rejected or accepted?
A project proposal submitted to you for evaluation follow: Investment, including depreciable assets of P495,000 with economic life of six years) - Php 865,000 Annual sales revenue - PhP 750,00 Variable cost of sales - 43.5% Annual cash operating costs - 295,000 Income tax rate - 25% Required: a. Annual cash return, payback period and internal rate of return. b. If the corporate cost of capital is 8%, should the project be implemented ?
a project estimated initial cost is $170,000. The project is expected to generate the following cashflows for the first 7 years. Years Net cashflows $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 If the company is MARR is 12%, using NPW/NFW analysis is the project profitable?
What is NPV for a project with the following cash flows: an initial cash out of $35,400 followed by inflows of $6,500 for three years and then a single inflow in the fourth year of $18,000 at a cost of capital of 9%? $7,001.94 -$6,450.33 $-6,500.13 $-6,194.93 $-6,895.16
Year Initial Cost & Carrying amount Annual net cash flows Annual net profit 0 $ 150,000.00 1 $ 70,000.00 $ 50,000.00 $ 15,000.00 2 $ 42,000.00 $ 45,000.00 $ 17,000.00 3 $ 21,000.00 $ 40,000.00 $ 19,000.00 4 $ 7,000.00 $ 35,000.00 $ 21,000.00 5 $ - $ 30,000.00 $ 23,000.00 1. Terrys titles ltd is reviewing a capital investment proposal.The inital cost of the project and the net cash flows for every year presented in the schedule above. It is estimate that there would be no salvage value at the end of the investments life.Terry's uses a required rate of return of 10 per cent to evaluate new capital investment proposals. a. Calculate the…
Compute the NPV of the project below assuming that the cost of capital is 8%: Year 0 1 2 3 FCF -85,000 55,000 55,000 68,000

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2- Given the information in Table and 15 percent cost of capital, (a) compute the net present value. (b) should the project be accepted? Operating Cash Inflows $50,000 $25,000 $10,000 $10,000 $10,000 $60,000 -$100,000 (Initial outlay)