Given the following incomplete sensitivity analysis, what is the net present value of annual cash flows of $300,000? Estimated Annual Net Cash Flow $300,000 $400,000 $500,000 Present value of annual net cash flows (× 4.487) $ ?? $1,794,800 $2,243,500 Present value of residual value 24,000 24,000 24,000 Total present value $ ?? $1,818,800 $2,267,500 Amount to be invested (1,500,000) (1,500,000) (1,500,000) Net present value $ ?? $ 318,800 $ 767,500 a.$(129,900) b.$1,346,100 c.$1,322,100 d.$129,900

Given the following incomplete sensitivity analysis, what is the net present value of annual cash flows of $300,000? Estimated Annual Net Cash Flow $300,000 $400,000 $500,000 Present value of annual net cash flows (× 4.487) $ ?? $1,794,800 $2,243,500 Present value of residual value 24,000 24,000 24,000 Total present value $ ?? $1,818,800 $2,267,500 Amount to be invested (1,500,000) (1,500,000) (1,500,000) Net present value $ ?? $ 318,800 $ 767,500 a.$(129,900) b.$1,346,100 c.$1,322,100 d.$129,900

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 4MAD

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Xander Inc. has prepared the following sensitivity analysis: Line Item Description Amount Amount Amount Estimated Annual Net Cash Flow $500,000 $600,000 $700,000 Present value of annual net cash flows (× 4.487) $2,243,500 $2,692,200 $3,140,900 Present value of residual value 50,000 50,000 50,000 Total present value $2,293,500 $2,742,200 $3,190,900 Amount to be invested (3,000,000) (3,000,000) (3,000,000) Net present value $(706,500) $(257,800) $190,900 In addition, it has assigned the following likelihoods to the three possible annual net cash flows: $500,000, 70%; $600,000, 20%; and $700,000, 10%. Based on an expected value analysis, which of the following statements is accurate? a. The expected value of the annual net cash flow is $540,000, and the project should be accepted. b. The expected value of the annual net cash flow is $660,000, and the project should be accepted. c. The expected value of the annual net cash flow is $660,000, and the project…
Please I will like an answer step by step. Thank you. Given the following sensitivity analysis, which of the following statements is true? Estimated Annual Net Cash Flow $500,000 $600,000 $700,000 Present value of annual net cash flows (× 4.487) $2,243,500 $2,692,200 $3,140,900 Present value of residual value 50,000 50,000 50,000 Total present value $2,293,500 $2,742,200 $3,190,900 Amount to be invested (3,000,000) (3,000,000) (3,000,000) Net present value (706,500) (257,800) 190,900 a.The investment is not justified if the annual net cash flow will be $500,000 or $600,000. b.The annual net cash flow necessary to generate a positive net present value is above $700,000. c.The total amount to be invested is $3,050,000. d.Only an annual net cash flow of $700,000 will allow for a positive residual value.
Consider the mixed streams of cash flows shown in the following table. YEAR A B1 $50,000 $10,0002 $40,000 $20,0003 $30,000 $30,0004 $20,000 $40,0005 $10,000 $50,000 Totals $150,000 $150,000 (a) Find the present value of each stream using a 15% discount rate(b) Compare the calculated present values and discuss them in light of the fact that the undiscounted cash flows total $150,000 in each case.
A manufacturer projects the cash flows shown below. Determine the rate of return if the cash flows occur as projected. Year Cash Flow, $ 0 -733,000 1 -467,000 2 215,000 3 279,000 4 – 8 309,000
Xanu Company's current value of operations is $4,079 million, with $679 million due to free cash flows occurring in Years 1 to 5, and 3,400 million due to free cash flows beyond Year 5 (the horizon date). What percent of value is due to expected long-term cash flows occurring beyond the horizon date?
An arithmetic cash flow gradient series equals $600 in year 1, $800 in year 2, and amounts increasing by $200 per year through year 5. At i = 6% per year, determine the factor from the compound interest factor table that is used to calculate the equivalent annual worth of the revenue through year 5. Multiple choice question. A. 4.212 B. 5.637 C. 1.884 D. 7.934
PAR Ltd is considering an investment and has determined the following: Expected net cash flows: – Year 1 $65,967 – Year 2 $70,290 – Year 3 $135,391 – Year 4 $103,435 – Year 5 $100,998 Annual depreciation $20,660 Period of investment 5 years Initial investment $611,246 Value at end of the investment period $124,671 Calculate the Accounting Rate of Return. Express your answer in a percentage with 2 decimal places.
An arithmetic cash flow gradient series equals $500 in year 1, $600 in year 2, and amounts increasing by $100 per year through year 9. At i = 10% per year, determine the present worth of the cash flow series in year 0.
An arithmetic cash flow gradient series equals $350 in year 1, $450 in year 2, and amounts increasing by $100 per year through year 12. At i = 11% per year, determine the present worth of the cash flow series in year 0. What is the present worth of the cash flow series in year 0?
a. What is the present value of the following set of cash flows, discounted at 10.6% per year? Year 1 2 3 4 5 CF $11 $21 $31 $41 $51 b. What is the present value of the following set of cash flows, discounted at 10.6% per year? Year 1 2 3 4 5 CF $51 $41 $31 $21 $11 c. Each set contains the same cash flows ($11, $21, $31, $41, $51), so why is the present value different?
The following table indicates the net cash flows of a capital asset: Year Net Cash Flow 0 $-159,000 1 $59,000 2 $59,000 3 $59,000 4 $59,000 Do not enter dollar signs or commas in the input boxes. Round your answer to 2 decimal places. Calculate the cash payback period using the formula method. Payback: Answer years
For the cash flows shown, the correct equation for FW2 using the ROIC method at the reinvestment rate of 20% per year is:a. [10,000(1+ i'' ) + 6000](1.20) - 8000b. [10,000(1.20) + 6000(1+i'' )](1.20) - 8000c. [10,000(1.20) + 6000](1.20) - 8000d. [10,000(1.20) + 6000](1+ i'' ) - 8000

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	Estimated Annual Net Cash Flow
	$300,000	$400,000	$500,000
Present value of annual net cash flows (× 4.487)	$ ??		$1,794,800	$2,243,500
Present value of residual value	24,000		24,000	24,000
Total present value	$ ??		$1,818,800	$2,267,500
Amount to be invested	(1,500,000)		(1,500,000)	(1,500,000)
Net present value	$ ??		$ 318,800	$ 767,500