For parts a-b, give your answer to the nearest cent. Do not put any spaces or symbols orcommas. Example: 67890.23A company estimates that it will need $300,000 in 9 years to replace an important machine. Ifit establishes a sinking fund, by making fixed monthly payments into an account paying 6.5%compounded monthly,a) how much should each payment be?b) How much of the $300,000 that is in the account in the end will be interest?

Required amount = $300,000 Time period = 9 years Interest rate = 6.5% compounded monthly

Answered: A company estimates that it will need…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 16EA: Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in...

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Project Y cost $8,000 and will generate net cash inflows of $1,500 in year one, $2,000 in year two, $2,500 in year three, $3,000 in year four and $2,000 in year five. What is the NPV using 8% as the discount rate?
Project X costs $10,000 and will generate annual net cash inflows of $4,800 for five years. What is the NPV using 8% as the discount rate?
Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in year two, $2,000 in year three. $2,500 in year four, and $2,000 in year five. What is the NPV using 8% as the discount rate? For further instructions on net present value in Excel, see Appendix C.
Your company estimates it will have to replace a piece of requirement at a cost of $800,000 in 5 years. To do this a sinking fund is established by making equal monthly payments into an account paying 6.6% compounded monthly. How much should each payment be? Show solution.
An investment project costs $10,000 and has annual cash flows of $2,920 for six years. a. What is the discounted payback period if the discount rate is 0 percent? (Enter 0 if the project never pays back on a discounted payback basis. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the discounted payback period if the discount rate is 4 percent? (Enter 0 if the project never pays back on a discounted payback basis. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the discounted payback period if the discount rate is 21 percent? (Enter 0 if the project never pays back on a discounted payback basis. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
An investment project costs $10,000 and has annual cash flows of $2,940 for six years. a. What is the discounted payback period if the discount rate is zero percent? (Enter 0 if the project never pays back. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the discounted payback period if the discount rate is 6 percent? (Enter 0 if the project never pays back. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the discounted payback period if the discount rate is 20 percent? (Enter 0 if the project never pays back. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
XYZ Corporation has annual cash demand of 3,000,000 for a fund set aside for operating expenses. The cost to transfer funds into this account is 500 each time. If cash was not placed into this fund, it would have earned 4% annually. Its current policy is to transfer 125,000 every 15 days. What is the increase/decrease in income if the Optimum Cash Balance model was applied to this account?
VISA is planning to spend $650,000 on a new marketing campaign. They believe that this action will result in additional cash flows of $314,000 each year for three years. If the discount rate is 17.5 percent, what is the NPV on this project? (Enter negative amounts using negative sign e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to 0 decimal places, e.g. 1,525.) The NPV is $
A company makes fixed annual payments to a sinking fund to replace equipment in five years’ time. The equipment is valued at £100,000 and interest rates are 12%. How much should each payment be? How would these payments change if the company could put an initial £10,000 into the fund?
Ayayai Corporation wants to withdraw $125,900 (including principal) from an investment fund at the end of each year for 9 years. What should be the required initial investment at the beginning of the first year if the fund earns 11%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Required initial investment %24
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A project has an initial cash outflow of $40,500 and produces cash inflows of $16,450, $17,800, and $16,428 for Years 1 through 3, respectively. What is the NPV at a discount rate of 11 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

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