Please follow instructions and show work. 6. How much is thepresent value of thepurchase of equipment?7. How much is thepresent value of thewind-down cost?8. How much is thepresent value of theannual cash inflows forthe first 4 years?Y9. How much is thepresent value of theannual cash inflow forFthe final year of thisinvestment?10. How much is theNet Present Value?11. What is the InternalRate of Return? (roundto the nearestThundredths place/input -Investment Option "South"This potential investment is less risky and shorter term, so it has a minimumrate of return of 8.60%. This investment would require an initial outlay of cashof $105,500, and at the end of the 5-year life of this investment INACorporation is expected to have to pay a wind-down cost of $5,273. For thefirst 4 years of this investment, net annual cash inflows are expected to be$36,500 and for the last year of the investment, the net annual cash inflow isexpected to be $91,250.

Present value is the current value of all future cash flows being discounted at a predefined rate of…

Investment Option "South" This potential investment is less risky and shorter term, so it has a minimum rate of return of 8.60%. This investment would require an initial outlay of cash of $105,500, and at the end of the 5-year life of this investment INA Corporation is expected to have to pay a wind-down cost of $5,273. For the first 4 years of this investment, net annual cash inflows are expected to be $36,500 and for the last year of the investment, the net annual cash inflow is expected to be $91,250.

Investment Option "South" This potential investment is less risky and shorter term, so it has a minimum rate of return of 8.60%. This investment would require an initial outlay of cash of $105,500, and at the end of the 5-year life of this investment INA Corporation is expected to have to pay a wind-down cost of $5,273. For the first 4 years of this investment, net annual cash inflows are expected to be $36,500 and for the last year of the investment, the net annual cash inflow is expected to be $91,250.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter12: Capital Investment Decisions

Section: Chapter Questions

Problem 21BEA

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