NPV unequal lives. Singing Fish Fine Foods has $1,990,000 for capital investments this year and is considering two potential projects for the funds. Project 1 is updating the store's deli section for additional food service. The estimated after-tax cash flow of this project is $590,000per year for the next five years. Project 2 is updating the store's wine section. The estimated annual after-tax cash flow for this project is $500,000 for the next six years. If the appropriate discount rate for the deli expansion is 9.4% and the appropriate discount rate for the wine section is 9.0%,use the NPV to determine which project Singing Fish should choose for the store. If the appropriate discount rate for the wine section is 9.0%, what is the NPV of the wine section

NPV unequal lives. Singing Fish Fine Foods has $1,990,000 for capital investments this year and is considering two potential projects for the funds. Project 1 is updating the store's deli section for additional food service. The estimated after-tax cash flow of this project is $590,000per year for the next five years. Project 2 is updating the store's wine section. The estimated annual after-tax cash flow for this project is $500,000 for the next six years. If the appropriate discount rate for the deli expansion is 9.4% and the appropriate discount rate for the wine section is 9.0%,use the NPV to determine which project Singing Fish should choose for the store. If the appropriate discount rate for the wine section is 9.0%, what is the NPV of the wine section

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 5PA

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NPV unequal lives. Singing Fish Fine Foods has $1,990,000 for capital investments this year and is considering two potential projects for the funds. Project 1 is updating the store's deli section for additional food service. The estimated after-tax cash flow of this project is $590,000 per year for the next five years. Project 2 is updating the store's wine section. The estimated annual after-tax cash flow for this project is $500,000 for the next six years. If the appropriate discount rate for the deli expansion is 9.4% and the appropriate discount rate for the wine section is 9.0%, If the appropriate discount rate for the deli expansion is 9.4%, what is the NPV of the deli expansion?
NPV unequal lives. Singing Fish Fine Foods has $1,990,000 for capital investments this year and is considering two potential projects for the funds. Project 1 is updating the store's deli section for additional food service. The estimated after-tax cash flow of this project is $590,000 per year for the next five years. Project 2 is updating the store's wine section. The estimated annual after-tax cash flow for this project is $500,000 for the next six years. If the appropriate discount rate for the deli expansion is 9.4% and the appropriate discount rate for the wine section is 9.0%, What is the adjusted NPV equivalent annual annuity of the deli expansion?
NPV unequal lives. Singing Fish Fine Foods has $1,800,000 for capital investments this year and is considering two potential projects for the funds. Project 1 is updating the store's deli section for additional food service. The estimatedafter-tax cash flow of this project is $620,000 per year for the next five years. Project 2 is updating the store's wine section. The estimated annual after-tax cash flow for this project is $540,000 for the next six years. If the appropriate discount rate for the deli expansion is 9.5% and the appropriate discount rate for the wine section is 9.1%, use the NPV to determine which project Singing Fish should choose for the store. Adjust the NPV for unequal lives with the equivalent annual annuity. Does the decision change? If the appropriate discount rate for the deli expansion is 9.5%, what is the NPV of the deli expansion?
NPVs, IRRs, and MIRRs for Independent Projects Edelman Engineering is considering including two pieces of equipment, a truck and an overhead pulley system, in this year's capital budget. The projects are independent. The cash outlay for the truck is $15,000, and that for the pulley system is $21,000. The firm's cost of capital is 11%. After-tax cash flows, including depreciation, are as follows: Year Truck Pulley 1 $5,100 $7,500 2 5,100 7,500 3 5,100 7,500 4 5,100 7,500 5 5,100 7,500 Calculate the IRR, the NPV, and the MIRR for each project, and indicate the correct accept/reject decision for each. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places. Use a minus sign to enter negative values, if any.
NPVs, IRRs, and MIRRs for Independent Projects Edelman Engineering is considering including two pieces of equipment, a truck and an overhead pulley system, in this year's capital budget. The projects are independent. The cash outlay for the truck is $19,000, and that for the pulley system is $20,000. The firm's cost of capital is 12%. After-tax cash flows, including depreciation, are as follows: Year Truck Pulley 1 $5,100 $7,500 2 5,100 7,500 3 5,100 7,500 4 5,100 7,500 5 5,100 7,500 Calculate the IRR, the NPV, and the MIRR for each project, and indicate the correct accept/reject decision for each. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places. Use a minus sign to enter negative values, if any. Truck Pulley Value Decision Value Decision IRR % -Select-AcceptRejectItem 2 % -Select-AcceptRejectItem 4 NPV $ -Select-AcceptRejectItem 6…
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.
NPVs, IRRs, and MIRRs for Independent Projects Edelman Engineering is considering including two pieces of equipment, a truck and an overhead pulley system, in this year's capital budget. The projects are independent. The cash outlay for the truck is $18,000, and that for the pulley system is $22,000. The firm's cost of capital is 14%. After-tax cash flows, including depreciation, are as follows: Year Truck Pulley 1 $5,100 $7,500 2 5,100 7,500 3 5,100 7,500 4 5,100 7,500 5 5,100 7,500 Calculate the IRR, the NPV, and the MIRR for each project, and indicate the correct accept/reject decision for each. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places. Use a minus sign to enter negative values, if any. Truck Pulley Value Decision Value Decision IRR % -Select-AcceptRejectItem 2 % -Select-AcceptRejectItem 4 NPV $ -Select-AcceptRejectItem 6…
NPV and AARR, goal-congruence issues. Liam Mitchell, a manager of the Plate Division for the Harvest Manufacturing company, has the opportunity to expand the division by investing in additional machinery costing $495,000. He would depreciate the equipment using the straight-line method and expects it to have no residual value. It has a useful life of 9 years. The rm mandates a required after-tax rate of return of 14% on investments. Liam estimates annual net cash inows for this investment of $130,000 before taxes and an investment in working capital of $5,000 that will be returned at the project’s end. Harvest’s tax rate is 30%.
Give typing answer with explanation and conclusion Singing Fish Fine Foods is considering two potential projects for the funds. Each will cost $2,000,000 for capital investments. Project 1 is updating the deli section of the store for additional food service. The estimated annual after-tax cash flow of this project is $600,000 per year for the next five years. Project 2 is updating the store’s wine section. The estimated annual after-tax cash flow for this project is $530,000 for the next six years. The appropriate discount rate for the deli expansion is 9.5% and the appropriate discount rate for the wine section is 9.0%. If the two projects are independent, use the NPV to determine which project(s) Singing Fish should choose for the store. Question 1: For each project, adjust the NPV for unequal lives with the equivalent annual annuity. Enter the highest equivalent annuity payment.
Legardalast Company uses a 12% hurdle rate for all capital expenditures. Based on company policy, only projects that have a discounted payback of 3 years or less are acceptable. It has lined up four projects with the following information. A B C D Initial cash outflow 400,000 596,000 496,000 544,000 Annual cash inflows Year 1 130,000 200,000 160,000 190,000 2 140,000 270,000 190,000 250,000 3 180,000 180,000 180,000 4 130,000 160,000 120,000 If the company has a capital budget of P1,500,000, what project/s should be pursued based on the discounted payback period? Show necessary computations on your solution.
You work for Whittenerg Inc., which is considering a new project whose data are shown below. What is the project's Year 1 cash flow? Sales revenues, each year $64,500 Depreciation $8,000 Other operating costs $25,000 Interest expense $8,000 Tax rate 35.0% a. $20,017 b. $20,715 c. $22,577 d. $19,318 e. $23,275
KUST is evaluating a new project for hangu campus. The financial manager has determined that the after-tax cash flows for the project will be $10,000; $12,000; $15,000; $10,000; and $7,000, respectively, for each of the Years 1 through 5. The initial cash outlay will be $40,000. The management of KUST has set a maximum PBP of 3.5 years and hurdle rate 13% for projects of this type. Should this project be accepted or rejected while using budgeting technique?