A corporation makes an investment of $20,000 that will provide the following cash flows after the corresponding amounts of time: Year 1 - $10,000 Year 2 - $10,000 Year 3 - $2,000 Should the company make this investment? What is the net present value at a 7 percent discount rate? Round your answer to two decimal points.

Q: Answer the following question with a clear explanation, showing any steps or processes used to reach…

A: Initial investment = 20000 Year 1 - $10,000 Year 2 - $10,000 Year 3 - $2,000 Discount rate = 7% Note…

Q: net present value

A: Difference between present value of cash inflows & outflows is NPV. Formula to calculate the NPV…

Q: The ABC Company has contracted to make the following payments: 500,000 immediately; 50,000 at the…

A: Year  Cash flow  PV 8% Present value  0 500,000 1.4693 734664 1 50,000 1.3604   68024.45 2…

Q: [EXCEL] Perpetuity:Calculate the annual cash flows for each of the following investments: (a)…

A: Perpetuity is a perpetual annuity, it is a series of equal infinite cash flows that occur at the end…

Q: PAR Ltd is considering an investment and has determined the following:   Expected net cash flows:…

A: Accounting rate of return means how much average annual profit can be earned on average investment…

Q: Three investments cost $7,000 each and have the following cash flows. Rank them on the basis of…

A: Capital budgeting is the process by which a corporation examines potential large projects or…

Q: Beyer Company's is considering the purchase of an asset for $205,000. It is expected to produce the…

A: The net present value method is used to evaluate investment projects. We can evaluate the project by…

Q: An investor invested $50,000 at the beginning. He received the following cash flows from the…

A: IRR stands for internal rate of return. It is the rate at which net present value of project is 0.…

Q: CDE Corporation is considering an investment that has the following cash flows: Now investment…

A: The question is based on the concept of Financial Management.

Q: What is the present worth (t=0) of this series of cash flows (arithmetic series)?

A: Present Worth: It is the present value of the cash flows of an investment or a project. These cash…

Q: The internal rate of return method is used by Testerman Construction Co. in analyzing a capital…

A: Internal rate of return is the rate at which the present value of cash inflows is equal to the…

Q: ou are given three investment alternatives to analyze. The cash flows from these three investments…

A: Let CFn = Cashflow in year n Discount rate (r) = 13%

Q: The following cash flow diagram represents an investment of Php 400 and revenue of x at the end of…

A: In order to have net present worth to be zero, Present value of end of year cash flows = Initial…

Q: Hsung Company accumulates the following data concerning a proposed capital investment: cash cost…

A: Net present value = Present value of cash inflows - Initial investment. If the net present value is…

Q: Assume a $55,000 investment and the following cash flows for two alternatives. Year Investment A…

A: A method of capital budgeting that helps to evaluate the time period a project requires to cover its…

Q: You are offered an asset that costs $150,000 and has cash flows of $1,350 at the end of every month…

A: IRR function = IRR(cashflows) NPV function = NPV(rate, cashflows) + initial cashflow Rate = 9%/12…

Q: A company has the following net cash inflows. Today -$7000, Year 1-$15 000, Year 2-$9000, Year 3+…

A: Net present value (NPV) of an alternative/project refers to the variance between the initial…

Q: Given the cashflow tabulated below. What is the payback period using the discounted method at…

A: Discounted payback period is the most common capital budgeting technique which aims to ascertain…

Q: Tennessee Corporation is analyzing a capital expenditure that will involve a cash outlay of…

A: Internal rate of return = Internal rate of return is a discount rate at the the present value of all…

Q: A company is considering a project with annual after-tax cash flows of $2,500.00 per year for six…

A: Present value: It can be defined as today’s worth of an investment that will be received in the…

Q: Beyer Company is considering the purchase of an asset for $180,000. It is expected to produce the…

A: Cash payback method: Cash payback period is the expected time period which is required to recover…

Q: Beyer Company is considering the purchase of an asset for $205,000. It is expected to produce the…

A: Net present value is the difference between the present value of cash inflows and present value of…

Q: Suppose an asset has a first cost of $8,000,a life of five years, a salvage value of $2,000 atthe…

A: Cash Flow form Operation after tax may be calculated using either: Direct method or Indirect method.…

Q: Motel Corporation is analyzing a capital expenditure that will involve a cash outlay of $208,240.…

A: Discount factor = Initial investment / Annual cash inflow = $208,240 / $40,000 = 5.206

Q: A corporation must decide whether to introduce a new product line. The new product will have startup…

A: NPV is the difference between present value of cash inflows and initial investment. NPV =PV of cash…

Q: Assume that Linda Company is to make an investment of uneven cash payments for three years as…

A: Interest rate = 10% End of year 1 payment = P 200,000 End of year 2 payment = P 300,000 End of year…

Q: Calculate the Net Present Value (NPV) and the Profitability Index (PI) over the six years. Assume…

A: Net present value (NPV) is the difference of present value of all cash inflows and the cash outflow.…

Q: Calculate a firm's free cash flow if it has net operating profit after taxes of P60,00 depreciation…

A: The cash generated by a company after accounting for financial outflows to continue operations and…

Q: Beyer Company is considering the purchase of an asset for $230,000. It is expected to produce the…

A: Payback period: Payback period is the expected time period which is required to recover the cost of…

Q: year Net cash flows Net profit 1 20000 2500 2 17500 3500 3 15000 4500 4 12500 5500 5 10000 6500…

A: Accounting Rate of return: It refers to that average return that is computed on average investment…

Q: Assume that the bank decided to give a loan of $ 59 million to Nivea Corporation (recorded for…

A: Hey, since there are multiple subpart questions posted, we will answer the first three subpart…

Q: ABC Corporation made a net investment of P500,000 in a vending machine. Over the five years of its…

A: Initial Investment = P500,000 Useful life = 5 years  Cost of capital = 9%

Q: An investment has the following annual cash flow 1st year- Php50,000 2nd year- Php 65.000 3rd year -…

A: ln Finance the Time value is considered to find out the present value and future value of cash flow.…

Q: assume that the bank decided to give a loan of $ 59 million to Nivea Corporation (recorded for…

A: Net present value (NPV) is the difference between the present values of cash inflows and cash…

Q: The internal rate of return method is used by Queen Bros. Construction Co. in analyzing a capital…

A: The internal rate of return is the percentage at which the net present value of the company is zero.…

Q: From Part A above, assume that the bank decided to give a loan of $ 59 million to Nivea Corporation…

A: Therefore, the NPV is -$37.41 million and PI is 0.37 times.

Q: Minn is considering an investment proposal with the following cash flows: Initial…

A: Here, Initial investment-depreciable assets = $227,500 New cash inflows = $32,500…

Q: Motel Corporation is analyzing a capital expenditure that will involve a cash outlay of $208,240.…

A: The internal rate of return refers to a metric used in capital budgeting for measuring…

Q: Blossom Company accumulates the following data concerning a proposed capital investment: cash cost…

A: Solution: Net present value = present value of cash inflows - Initial cash cost  = (44000*5.22) -…

Q: Motel Company is analyzing a capital expenditure that will involved a cash out lay of $208,240.…

A: The internal rate of return method: The internal rate of return method is one of the capital…

Q: Tennessee Corporation is analyzing a capital expenditure that will involve a cash outlay of…

A: Capital Budgeting: Capital budgeting is a technique which enables an entity to know the…

Q: From Part A above, assume that the bank decided to give a loan of $ 59 million to Nivea Corporation…

A: Net present value (NPV) is the difference between the present values of cash inflows and cash…

Q: The company Alumnos Emprendedores S.A. has an investment for a total amount of $175,800.00, and…

A: Period of Recovery (in years) = Investment / Annual Cash Flow

Q: A firm, whose cost of capital is 8 percent, may acquire equipment for $146,825 and rent it to…

A: Given: Particulars Amount Cost of capital 8% Acquire equipment $146,825 Years 5 Rent…

Q: Alfarsi Industries uses the net present value method to make investment decisions and requires a 15%…

A: Net present value means the difference between the present value of cash inflow and present value of…

Q: Roopali is considering an investment proposal with the following cash flows: Initial…

A: Payback Period: This is the amount of time it takes to recoup the cost of an investment or the…

Q: Sunshine Corporation is reviewing an investment proposal. The initial cost of the investment is R52…

A: 1. Year Cash inflows Cumulative Cash inflows 1 20000 20000 2 17500 37500 3 15000 52500 4…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.