company need 6,000 in 5 years to buy a new equipment. in order to accumulate this, sum a sinking fund consisting of three annual payments is established now. for tax purposes, no further payments will be made after three years. what payment are necessary if money 18% per anum? solve this in the formula. not in the excel.

company need 6,000 in 5 years to buy a new equipment. in order to accumulate this, sum a sinking fund consisting of three annual payments is established now. for tax purposes, no further payments will be made after three years. what payment are necessary if money 18% per anum? solve this in the formula. not in the excel.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 34P

See similar textbooks

Similar questions

Project A costs $5,000 and will generate annual after-tax net cash inflows of $1,800 for five years. What is the NPV using 8% as the discount rate?
Each of the following scenarios is independent. All cash flows are after-tax cash flows. Required: 1. Patz Corporation is considering the purchase of a computer-aided manufacturing system. The cash benefits will be 800,000 per year. The system costs 4,000,000 and will last eight years. Compute the NPV assuming a discount rate of 10 percent. Should the company buy the new system? 2. Sterling Wetzel has just invested 270,000 in a restaurant specializing in German food. He expects to receive 43,470 per year for the next eight years. His cost of capital is 5.5 percent. Compute the internal rate of return. Did Sterling make a good decision?
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.
Manzer Enterprises is considering two independent investments: A new automated materials handling system that costs 900,000 and will produce net cash inflows of 300,000 at the end of each year for the next four years. A computer-aided manufacturing system that costs 775,000 and will produce labor savings of 400,000 and 500,000 at the end of the first year and second year, respectively. Manzer has a cost of capital of 8 percent. Required: 1. Calculate the IRR for the first investment and determine if it is acceptable or not. 2. Calculate the IRR of the second investment and comment on its acceptability. Use 12 percent as the first guess. 3. What if the cash flows for the first investment are 250,000 instead of 300,000?
A restaurant is considering the purchase of new tables and chairs for their dining room with an initial investment cost of $515,000, and the restaurant expects an annual net cash flow of $103,000 per year. What is the payback period?
Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $17 million, and production and sales will require an initial $5 million investment in net operating working capital. The company’s tax rate is 25%. What is the initial investment outlay? The company spent and expensed $150,000 on research related to the new product last year. What is the initial investment outlay? Rather than build a new manufacturing facility, the company plans to install the equipment in a building it owns but is not now using. The building could be sold for $1.5 million after taxes and real estate commissions. What is the initial investment outlay?
A company wishes to spend $40,000 for new equipment and decides to set up a sinking fund to accumulate this money over the 3-year period. If payments are to made to the fund quarterly with interest compounded quarterly at an annual rate of 5%, how large should the payments be?
ELJ Corporation plans to construct its own building at the end of 10 years for an estimated cost of P15,000,000.00. To accumulate this amount, it will have to make equal year end deposits in a fund earning 13%. However, at the end of the 5th year, it was decided to have a larger building that originally intended to an estimated cost of P24,000,000.00. What should be the annual deposit for the last 5 years? Answer. P2,203,175.82