-50000 100000 150000 -200000 2 3 U 0 O S e Discount Rate owner of a hair salon spends $1,000,000 to renovate its premises, estimating that this will increase her cash flo 220,000 per year. She constructs the above graph, which shows the net present value (NPV) as a function of th ount rate. If her discount rate is 6%, should she accept the project?
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- Use a financial calculator or computer software program to answer the following questions: Melanie is trying to save money for retirement and has a future goal of $750,000 at the end of 20 years. Determine the present value of her goal using a discount rate of 11%. How would the present value change if the $750,000 is to be received at the end of 15 years instead? Explain the impact and show your work? FV= PV(1+)^nUse the information for the question(s) below. 150000 NPV 100000 50000 0 -50000 -100000 -150000 -200000 2 3 5 6 Discount Rate 7 8 9 U 10 The owner of a hair salon spends $1,000,000 to renovate its premises, estimating that this will increase her cash flow by $220,000 per year. She constructs the above graph, which shows the net present value (NPV) as aUse the information for the question(s) below. NPV 150000 100000 50000 0 T T -50000 -100000 -150000 -200000 1 -2 3 * -5 6 7 - 8 9 10 Discount Rate The owner of a hair salon spends $1,000,000 to renovate its premises, estimating that this will increase her cash flow by $220,000 per year. She constructs the above graph, which shows the net present value (NPV) as a function of the discount rate. If her discount rate is 6%, should she accept the project? A. No, because the NPV is positive at that rate. B. Yes, because the NPV is positive at that rate. C. No, because the NPV is negative at that rate. D. Cannot be determined from the information given.
- Ashley projects that she can get $100,000 cash per year for 5 years on a real estate investment project. If Ashley wants to earn a rate of return of 9%, what is the maximum that she should pay for the investment? (rounded to the nearest dollar)A. $360,478 B. $446,429 C. $560,000 D. $388,965You are thinking of buying an old house, renovating it, and then selling it. Your expected cash flow is as follows: Year 1 Year 3 Year 0 (present) -330,000 Year 2 660,000 -180,000 If you can borrow the money at 11% interest, would this project be profitable? Show your workings.Alia wants to open up a sandwich shop in Amman. She collects data on the initial cost, operating and maintenance cost, yearly benefit (revenue from sandwich sales), and salvage value of the equipment she buys for the sandwich shop when she closes down the business in 5 years. Determine the best alternative using the annual cash flow analysis method for an interest rate of 8%. Do nothing is a possible alternative. Alt B $45,000 $25,000 $10,000 $4,000 $18,000 $13,000 $3,000 $6,000 Alt A First Cost Benefit per yr O&M annua st Salvage Value Life in years 5 (35 Points) Alt C $20,000 $1,900 $9,000 $4,600 Alt A $45,000 $10,000 and $18,000 Alt B $25,000 $4,000 $13,000 Alt C $20,000 $1.900 $9,000 First Cost Benefit per year Operations maintenance cost Salvage Value Life in years $3,000 $6.000 $4,600
- Margaret has an investment opportunity where she can receive cashflows as follows 1. $1,000 end of years 1 & 2 2. $1,100 end of years 3 & 4 3. $1,200 end of years 5 to perpetuity 4. $1,400 end of years 8 to perpetuity If you require a return of 8%, how much should you be willing to pay for this investment today? A. $36, 700 B. $59, 750 C. $24, 702 D. $25, 584 E. $27, 353 F. $58, 750Payback Period < Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a. Colby Hepworth has just invested $600,000 in a book and video store. She expects to receive a cash income of $120,000 per year from the investment. b. Kylie Sorensen has just invested $1,640,000 in a new biomedical technology. She expects to receive the following cash flows over the next 5 years: $350,000, $490,000, $820,000, $520,000, and $300,000. c. Carsen Nabors invested in a project that has a payback period of 4 years. The project brings in $960,000 per year. d. Rahn Booth invested $1,400,000 in a project that pays him an even amount per year for 5 years. The payback period is 2.5 years. Required: 1. What is the payback period for Colby? Round your answer to two decimal places. 5 years 2. What is the payback period for Kylie? Round your answer to one decimal place. years 3. How much did Carsen invest in the project? $ 4. How much cash does Rahn receive each…Payback Period Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. Colby Hepworth has just invested $400,000 in a book and video store. She expects to receive a cash income of $120,000 per year from the investment. Kylie Sorensen has just invested $1,400,000 in a new biomedical technology. She expects to receive the following cash flows over the next 5 years: $350,000, $490,000, $700,000, $420,000, and $280,000. Carsen Nabors invested in a project that has a payback period of 4 years. The project brings in $960,000 per year. Rahn Booth invested $1,300,000 in a project that pays him an even amount per year for 5 years. The payback period is 2.5 years. Required: 1. What is the payback period for Colby? Round your answer to two decimal places.years 2. What is the payback period for Kylie? Round your answer to one decimal place.years 3. How much did Carsen invest in the project? $ 4. How much cash does Rahn receive each year? $ per…
- Payback Period Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. Colby Hepworth has just invested $400,000 in a book and video store. She expects to receive a cash income of $120,000 per year from the investment. Kylie Sorensen has just invested $1,400,000 in a new biomedical technology. She expects to receive the following cash flows over the next 5 years: $350,000, $490,000, $700,000, $420,000, and $280,000. Carsen Nabors invested in a project that has a payback period of 4 years. The project brings in $960,000 per year. Rahn Booth invested $1,300,000 in a project that pays him an even amount per year for 5 years. The payback period is 2.5 years. Required: 1. What is the payback period for Colby? Round your answer to two decimal places.fill in the blank 1 years 2. What is the payback period for Kylie? Round your answer to one decimal place.fill in the blank 2 years 3. How much did Carsen invest in the project?$fill in the blank…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?