Motel Corporation is analyzing a capital expenditure that will involve a cash outlay of $208,240. Estimated cash flows are expected to be $40,000 annually for 7 years. The present value factors for an annuity of $1 for 7 years at interest of 6%, 8%, 10%, and 12% are 5.582, 5.206, 4.868, and 4.564, respectively. The internal rate of return for this investment is a.10% b.12% c.8% d.6%

Q: An independent project has a net investment of $250,000, and generates net cash flows of $90,000 for…

A: Calculation of Net present value of the project: Answer: Net present value is $19,155.09

Q: Garfield Inc. is considering a 10-year capital investment project with forecasted revenues of…

A: Net cash inflow represents the inflow of the company after deducting the cash outflow of the…

Q: Glossimer Thread Company is evaluating an investment that will cost $720,000 and will yield cash…

A: Internal rate of return is the discount rate at which the present value of cash inflows are equal to…

Q: Park Co. is considering an investment that requires immediate payment of $27,000 and provides…

A: Present value of $1 annuity = Annuity x ((1-(1+i)^-n)/i)

Q: The internal rate of return method is used by Testerman Construction Co. in analyzing a capital…

A: a. At internal rate of return, the present value of cash inflows is equal to the present value of…

Q: Park Co. is considering an investment that requires immediate payment of $27,000 and provides…

A: Investment refers to the sum amount of money or payment made in order to acquire some form of…

Q: The management of Amex Corp. plans to meet a future capital expenditure by depositing $25,000 into a…

A: The present value of the investment is the amount that one invest in the current period. The future…

Q: An investment is expected to generate net operating cash inflows of $25,000 per year for each of…

A: Internal rate of return is the rate at which present value of cash outflows is equal to present…

Q: A project has estimated to cost $54,035. and provide annual net cash flows of $12,000 for 8 years.…

A: The provided information are: Initial cost estimated = $54,035 Annual net cash flow = $12,000 Term =…

Q: Your firm is evaluating a project that should generate revenue of P4,600 in year one, P5,200 in year…

A: Future value of any deposits is the sum total of each cash flow compounded at required rate of…

Q: Alfarsi Industries uses the net present value method to make investment decisions and requires a 15%…

A: Present Value: The value of today’s amount to be paid or received in the future at a compound…

Q: Pena Company is considering an investment of $29,480 that provides net cash flows of $8,900 annually…

A: NPV :— NPV is one of the Capital Budgeting techniques which help to Find out whether project is…

Q: EABL is considering an investment that will cost $80,000 and have a useful life of 4 years. During…

A: The payback period is the time taken by an investment to reach its Break-Even Point or in other…

Q: The management of Osborn Corporation is investigating an investment in equipment that would have a…

A: Explanation:

Q: Tennessee Corporation is analyzing a capital expenditure that will involve a cash outlay of…

A: Internal rate of return = Internal rate of return is a discount rate at the the present value of all…

Q: Ipswich Corporation is considering an investment opportunity with the expected net cash inflows of…

A: The net present value is present value of cash inflow less initial investment

Q: A company is considering a project with annual after-tax cash flows of $2,500.00 per year for six…

A: Present value: It can be defined as today’s worth of an investment that will be received in the…

Q: The company is considering adding a new product line that will require an investment of $1,454,000.…

A:

Q: Margaret Company has an initial cost of investment amounting to P225,000 and expects the following…

A: The payback bailout period is the method that represents the period in which the total investment in…

Q: Jane’s Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each…

A: Payback period for equal annual cash flows = Initial investment/Annual cash flows   Payback period…

Q: An investment requires an initial disbursement of € 2,500,000 and the duration of the project is 3…

A: The difference between the present worth of cash inflows and withdrawals over a time period is the…

Q: The Sampson Company is considering a project that requires an initial outlay of $75,000 and produces…

A: 1) Computation:

Q: The value of an investment comes from its cash flows. Let’s say you are intent on receiving $45,000…

A: A concept through which it is studied that the current worth of money is higher than its future…

Q: Cepeda Manufacturing Company is considering three new projects, each requiring an equipment…

A: Net Present Value is a concept of Capital Budgeting. Net Present Value is calculated by subtracting…

Q: QI/ Ipswich Corporation is considering an investment opportunity with the expected net cash inflows…

A: NPV is a technique of capital budgeting in which all outflows and inflows during the project’s life…

Q: The HUT is evaluating a 5 year investment projected to yield the following relevant cash flows over…

A: NPV = Present value of cash inflow - Present value of cash outflow Profitability index=…

Q: Micheal is considering a capital investment that costs $540,000 and will provide net cash inflows…

A: Answer  Calaculation of Net Present Value(NPV): At first we need to calaculate the present value of…

Q: ABC, Ltd. is considering the purchase of a new factory that will increase their capacity.  They plan…

A: Capital budgeting: Capital budgeting is the technique used to analyse whether to invest in a long…

Q: Motel Corporation is analyzing a capital expenditure that will involve a cash outlay of $208,240.…

A: The internal rate of return refers to a metric used in capital budgeting for measuring…

Q: A project requires a $41,000 initial investment and is expected to generate end-of-period annual…

A: Introduction:- Net present value means as follows under:- Net present value is a tool of Capital…

Q: Purple Cloud Inc. has $500,000 to invest. The company is trying to decide between two alternative…

A: The decision about the choice of alternative will be based on the calculation of present value of…

Q: Motel Company is analyzing a capital expenditure that will involved a cash out lay of $208,240.…

A: The internal rate of return method: The internal rate of return method is one of the capital…

Q: Kumi Ltd is considering an investment in a project, which requires an immediate payment of…

A: Formulas:

Q: An investment requires an initial disbursement of €2,500,000 and the duration of the project is 3…

A: Capital budgeting indicates the evaluation of the profitability of possible investments and projects…

Q: Park Co. is considering an investment that requires immediate payment of $27,000 and provides…

A: Payback period: Payback period is the length of time in which an investment reaches its break-even…

Q: Alfarsi Industries uses the net present value method to make investment decisions and requires a 15%…

A: Net present value of the investment means difference of present values of cash inflows and cash…

Q: The Salt Store is evaluating a capital expenditure proposal with the following predicted cash flows:…

A: The accounting rate of return can be computed by dividing the average annual income by the average…

Q: Lanham Incorporated recently invested in a project with a 3-year life span. The net present value…

A: The present value is the present worth of the amount that will be paid or received at future.

Q: Alfarsi Industries uses the net present value method to make investment decisions and requires a 15%…

A: Net present value means the difference between the present value of cash inflow and present value of…

Q: Your firm is evaluating a project that should generate revenue of P4,600 in year one, P5,200 in year…

A: Required return = 12% Semi annual rate = 12%/2 = 6% Year Revenue 1 4600 2 5200 3 5900 4…

Q: Palau, Inc. requires all its capital investments to generate an internal rate of return of 14…

A: Solution: Initial investment = P80,000 Period = 5 years IRR = 14%

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.