Q: True or False In the net present value method, market research costs incurred in the past should be…
A: An investment appraisal depicts a financial analysis of a capital project that requires a huge…
Q: Should you subtract interest expense or dividends when calculating project cash flow?
A: It is one of the principal expenses found in the income statement. An organization must fund its…
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Q: What are the Effects of Inflation on Projects with Depreciable Assets?
A: Answer: A depreciable asset is nothing a property that gives more economic benefit over a tax period…
Q: How can the money released from a project be reinvested to yield a rate of return equal to that…
A: A rate of return can provide brokers and investors key data for future trades or investments. The…
Q: How can the calculation of Net Income Attributable be done to a new project?
A: The question is based on the concept of Net Income Attributable for new projects.
Q: Why is it not always possible for the cash borrowed (released) from a project to be reinvested to…
A: We need to use the concept of capital budgeting and internal rate of return to answer the question.
Q: how can depreciation be a cash flow?
A: Depreciation is an accounting method of allocating the cost of a tangible or physical asset over its…
Q: How can we determine after-tax cash flows for an investmenta project with only operating and…
A: Discount rate is the weighted average cost of capital (WACC) which is used in the project. WACC is…
Q: Which of the following should NOT be included in the cash flows for project analysis? Opportunity…
A: Explanation of the given option: 1. opportunity cost : It is the cost to be borne for not choosing…
Q: What would be a business example that shows how depreciation and accelerated depreciation can affect…
A: Depreciation- is a method used by a business or company to write off an asset's value over it's…
Q: Depending on the cash flow assumption, should the project must use continuous cash flow? why?
A: In continuous discounting and continuous cash flows, the assumption is that the cash stream happens…
Q: Explain the Incremental Cash Flows from Undertaking a Project?
A: Incremental cash flows It is an additional amount of net cash flows produced by the project…
Q: Identification of Relevant Cash Flows what is the incremental net cash flow of a project?
A: Incremental cash flows: Incremental cash flows are the ones that might be generated from a new…
Q: Why are interest charges not deducted when a project’s cash flows are calculated for use in a…
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Q: How is depreciation treated in the indirect method of estimating project cash flows? O Include the…
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Q: The AW of a project can be estimated by reducing all cash flows including the capital investment,…
A: Annual worth is the equivalent annual value for the cash flows for the given investment project.
Q: Why should companies use a project’s free cash flows rather than accountingincome when determining a…
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Q: 6. Which of the following is NOT a relevant cash flow and thus should NOT be reflected in the…
A: Before choosing from the different alternatives, company has to take decision on the basis of cost…
Q: If depreciation is not a cash flow item, why does it affect the level of cash flows from a project…
A: The term depreciation refers to the process of systematically allocating the cost of a fixed asset…
Q: How does depreciation enter into the calculation of operating cash inflows? Explain theu…
A: Depreciation allocates expenses related to assets over their useful life and it assists in reducing…
Q: State a method that translates a project's cash flows into an equivalent net present value?
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Q: Explain how sunk costs and cannibalisation affect the determination of an investment’s incremental…
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Q: Concerning incremental project cash flow, this is a cost one would never count as a cash flow of the…
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Q: Explain why depreciation should not be included as a cost in a discounted cash flow (DCF) analysis…
A: Hi, Thanks for posting the question. As per the Q&A guidelines of Bartleby, suppose to answer…
Q: Why should companies use a project’s cash flows rather thanaccounting income when determining a…
A: Net Present Value is the difference between the current value of cash inflow and cash outflow for a…
Q: h expense
A: Depreciation definition : In simple words, depreciation refers to the expense of an organisation…
Q: How can we determine the project cash flows over the project life?
A: Cash Flow Statement is a part of the Financial Statement of a company. It literally means a…
Q: Which of the following would be considered a terminal cash flow? A. The expected salvage value of…
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Is after-tax cashflow still the
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- Net present value method, internal rate of return method, and analysis for a service company The management of Advanced Alternative Power Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows: The wind turbines require an investment of 887,600, while the biofuel equipment requires an investment of 911,100. No residual value is expected from either project. Instructions 1. Compute the following for each project: A. The net present value. Use a rate of 6% and the present value of an annuity table appearing in Exhibit 5 of this chapter. B. A present value index. (Round to two decimal places.) 2. Determine the internal rate of return for each project by (A) computing a present value factor for an annuity of 1 and (B) using the present value of an annuity of 1 table appearing in Exhibit 5 of this chapter. 3. What advantage does the internal rate of return method have over the net present value method in comparing projects?Net present value method, present value index, and analysis for a service company First United Bank Inc. is evaluating three capital investment projects by using the net present value method. Relevant data related to the projects are summarized as follows: Instructions 1. Assuming that the desired rate of return is 15%, prepare a net present value analysis for each project. Use the present value table appearing in Exhibit 2 of this chapter. 2. Determine a present value index for each project. (Round to two decimal places.) 3. Which project offers the largest amount of present value per dollar of investment? Explain.METHODS THAT CONSIDER TIME VALUE OF MONEY Two investment proposals have been made and the following data thereon are given: Project ALPHA Project BETA Investment P123,417 P155,934 Depreciable assets included in the investment figure 60,000 72,000 Economic life 8 years 12 years Annual sales revenue P65,000 P78,000 Annual out-of-pocket operating cost 36,000 42,500 Income tax rate 35% Cost of capital 10% Determine which proposal is the better one based on: a. Internal rate of return b. Net present value c. Profitability index d. Discounted payback period
- A company is evaluating three possible investments. The following information is provided by the company: Project A Project B Project C Investment $238,000 $54,000 $238,000 Residual value 0 30,000 40,000 Net cash inflows: Year 1 70,000 30,000 100,000 Year 2 70,000 21,000 70,000 Year 3 70,000 17,000 80,000 Year 4 70,000 14,000 40,000 Year 5 70,000 0 0 What is the payback period for Project A? (Assume that the company uses the straight−line depreciation method.) (Round your answer to two decimal places.) A. 1.8 years B. 2.4 years C. 5.00 years D. 3.4 yearsFollowing is information on two alternative investment projects being considered by Tiger Company. The company requires an 8% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project X1 Project X2 Initial investment $ (108,000) $ (176,000) Net cash flows in: Year 1 39,000 81,000 Year 2 49,500 71,000 Year 3 74,500 61,000 a. Compute each project’s net present value.b. Compute each project’s profitability index.c. If the company can choose only one project, which should it choose on the basis of profitability index?A project requires an initial investment of $500,000. The following cash flows have beenestimated for the life of the project:Year Cash flow ($)1 120,0002 150,0003 180,0004 160,000 a. The company uses NPV to appraise projects. Using a discount rate of 7%, calculate the NPVof the project and recommend whether the project should be undertaken.
- Consider the following financial data for an investment project:• Required capital investment al n = 0: $ 100,000• Project service life: I 0 yea rs• Salvage value at N = I 0: $15,000• Annual revenue: $150.000• Annual O&M costs (not including depreciation): $50.000• Depreciation method for tax purpose: seven-year MACRS• Income tax rate: 40%.Determine the project cash flow at the end of year lO.(a) $69.000(b) $73.000(c) $66.000(d) $67.000Question Content Area Net present value method, internal rate of return method, and analysis for a service company The management of Advanced Alternative Power Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows: Year Wind Turbines Biofuel Equipment 1 $400,000 $840,000 2 400,000 840,000 3 400,000 840,000 4 400,000 840,000 The wind turbines require an investment of $1,035,600, while the biofuel equipment requires an investment of $2,398,200. No residual value is expected from either project. Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 Required: 1a. Compute the net present value for each…Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 5% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project X1 Project X2 Initial investment $ (102,000) $ (164,000) Net cash flows in: Year 1 36,000 76,500 Year 2 46,500 66,500 Year 3 71,500 56,500 a. Compute each project’s net present value.b. Compute each project’s profitability index.c. If the company can choose only one project, which should it choose on the basis of profitability index? Please answer "C" as well. I wasn't able to include that in the images