Asutte S90,000 is avialable for investment and MARR= 10% per yoar, If altemative Awould eam 35% per yoar on an investment of $50,000, and B woukd oam 2 per year onan invintment of s85.000, What are the weighted averages for A and 8? Which investment in better economicalty?v Overall RORAv Overal ROv Which nesnerd in better economicatyA 20 %8. 10 3%CAllemative0.33 3%E Allermative AF. 28 3N

Here, Available funds for investment = $90,000 MARR = 16% Investment A return = 35% Investment A…

Assume S00 000 is avialable for investment and MARR=t0% per year if atemative A would eam 35% per year on an investment of $50.000 nd B woukd eam 29% per year on an invetment of sa5.000, What are the weightod averages for A and 8? Which investment in better economicaty? v Over RORA A26 6% Which menment in bettr economy? CAmatve E Atemative A F28%

Assume S00 000 is avialable for investment and MARR=t0% per year if atemative A would eam 35% per year on an investment of $50.000 nd B woukd eam 29% per year on an invetment of sa5.000, What are the weightod averages for A and 8? Which investment in better economicaty? v Over RORA A26 6% Which menment in bettr economy? CAmatve E Atemative A F28%

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.1.1MBA

See similar textbooks

Similar questions

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?
Assume $100,000 is available for investment and MARR =10% per year. If alternative A would earn 25% per year on inveatment of 60,000 and B would be earn 20% per year on investment of 75000 the weighted average(ROR) of A
For the following table, assume a MARR of 15%per year and a useful life for each alternative of eightyears which equals the study period. The rank-orderof alternatives from least capital investment to greatestcapital investment is Z → Y → W → X. Completethe incremental analysis by selecting the preferredalternative. “Do nothing” is not an option. (6.4)FE PRACTICE PROBLEMS 307Z → Y Y → W W → X! Capital −$250 −$400 −$550investment! Annual cost 70 90 15savings! Market 100 50 200value! PW(15%) 97 20 ???(a) Alternative W (b) Alternative X(c) Alternative Y (d) Alternative ZThe following mutually exclusive investment alternatives have been presented to you.
$174, 000, is expected togenerate $54, 600 for five years.Bidump's required rate of returnis 13 percent. What is theinternal rate of return (IRR) of theproject the company shouldpurchase? Do not round aintermediate calculations. Roundyour answer to two decimalplaces. should be purchased. Its Training IRR is %.
Kk201. An asset produces $150 in two years, and $250 in four years, and the current price has been calculated toreflect a rate of return of 9% annually. Using the definition that convexity = second derivative of pricedivided by price, find the convexity of this asset evaluated at the annual yield rate of 9%.
Two investments have the following pattern of expected returns:Investment AYear 1 2 3 4 4 (sale)BTCF $5,000 $10,000 $12,000 $15,000 $120,000Investment BYear 1 2 3 4 4 (sale)BTCF $2,000 $4,000 $1,000 $5,000 $180,000Investment A requires an outlay of $110,000 and Investment B requires an outlay of $120,000.a. What is the BTIRR on each investment?b. If the BTIRR were partitioned based on BTCFo and BTCFs what proportions of the BTIRR would be represented by each?c. What do these proportions mean?
Consider an investment with an initial cost of $10,000 and uniform annual revenue of $2,500 per year over the next five years. (a) Show that the IRR for this investment is 7.9308%. (b) Explain why is the IRR in (a) less than 2,500/10,000 = 25%.
An investment of $1,400,000 is made in 5-year MACRS-GDS equipment. Measured in constant dollars, the investment yields annual returns of $400,000 and a salvage value of $500,000 at the end of the 7-year planninghorizon. A 25% tax rate and a 3% inflation rate apply. The real after-taxminimum attractive rate of return is 8%. For the investment, calculate a. After-tax present worth, b. After-tax annual worth measured in then-current dollars,c. Real internal rate of return, and d. EVA measured in then-current dollars.
You’re trying to choose between two different investments, both of which have up-front costs of $62,000. Investment G returns $122,000 in five years. Investment H returns $182,000 in 9 years. Calculate the rate of return for Investments G and H.
Given the table of values, solve for the Benefit Cost Ratio (round-off to 4 decimal places) at an interest rate of i=10% per annum. PW, $ AW, $ FW, $ First Cost 100,000 259,370 M & O Cost 61,446 10,000 159,374 Benefits 40,000 637,496 Disbenefits 30,723 5,000
Park Company is considering an investment that requires immediate payment of $27,215 and provides expected cash inflows of $8,400 annnually for four years. Assume Park Company requires a 8% return on it's investments. A. What is the net Present Value of this investment? (PV of $1, FV of $1, PVA of $1 and FVA of $1) B. Based on NPV alone, should Park Company invest?
Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $14,700 and will produce cash flows as follows: End ofYear Investment A B 1 $ 9,300 $ 0 2 9,300 0 3 9,300 27,900 The present value factors of $1 each year at 15% are: 1 0.8696 2 0.7561 3 0.6575 The present value of an annuity of $1 for 3 years at 15% is 2.2832 The net present value of Investment B is: Multiple Choice $(18,344). $8,679. $3,644. $46,244. $13,200