Proposals L and K each cost $600,000, have 6-year lives, and haveexpected total cash inflows of $720,000. Proposal L is expected toprovide equal annual net cash flows of $170,000, while the net cashflows for Proposal K are as follows:Year 1$250,000Year 2200,000Year 3100,000Year 450,000Year 5100,000Year 620,000$720,000Determine the cash payback period for each proposal. Round youranswers to two decimal places.Proposal LyearsProposal Kyears

Calculate the payback period as follows: Cash payback period = Initial investment/ Net cash inflows…

Answered: Proposals L and K each cost $600,000,…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 16EA: Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in...

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Similar questions

An investment of 1,000 produces a net cash inflow of 500 in the first year and 750 in the second year. What is the payback period? a. 1.67 years b. 0.50 year c. 2.00 years d. 1.20 years e. Cannot be determined
Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in year two, $2,000 in year three. $2,500 in year four, and $2,000 in year five. What is the NPV using 8% as the discount rate? For further instructions on net present value in Excel, see Appendix C.
Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and provide the following cash flows over the next five years: $88,000, 92,000, $91,000, $72,000, and $71,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel, see Appendix C.
Project X costs $10,000 and will generate annual net cash inflows of $4,800 for five years. What is the NPV using 8% as the discount rate?
3.Proposals L and K each cost $500,000, have 6-year lives, and have expected total cash flows of $720,000. Proposal L is expected to provide equal annual net cash flows of $120,000, while the net cash flows for Proposal K are as follows: Year 1 $250,000 Year 2 200,000 Year 3 100,000 Year 4 90,000 Year 5 60,000 Year 6 20,000 $720,000 Determine the cash payback period For each proposal.
Proposals M and N each cost $550,000, have 6-year lives, and have expected total cash flows of $750,000. Proposal M is expected to provide equal annual net cash flows of $125,000, while the net cash flows for Proposal N are as follows: Year 1 $250,000 Year 2 200,000 Year 3 150,000 Year 4 75,000 Year 5 50,000 Year 6 25,000 $750,000 Determine the cash payback period for each proposal. Round your answers to three decimal places. Proposal M ________?_______ years Proposal N ________?________years
A company can purchase a piece of equipment for $4,230. The equipment has a three-year life and will produce cash inflows of $1,350 in each of the first and second years and $3,110 in the third year. What is the project's simple payback period (in number of years) assuming that the cash inflows are received uniformly over each respective year? Options 2.31 2.37 2.43 2.49 2.55
Proposals L and K each cost $500,000, have 6-year lives, and have expected total cash flows of $750,000. Proposal L is expected to provide equal annual net cash flows of $125,000, while the net cash flows for Proposal K are as follows: Year 1 $250,000 Year 2 200,000 Year 3 100,000 Year 4 90,000 Year 5 60,000 Year 6 50,000 $750,000 Determine the cash payback period for each proposal. Round your Proposal K answer to one decimal place. Cash Payback Period Proposal L fill in the blank 1 years Proposal K fill in the blank 2 years
XYZ plans to construct an additional building at the end of 10 years for an estimated cost of P5,000,000.00. To accumulate this amount, it will make equal year-end deposits in a fund earning 13%. However, at the end of the 5th year, it was decided to have a larger building than originally intended to an estimated cost of P8,000,000.00 What should be the annual deposit for the last five years? Please provide CASH FLOW diagram. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
ABC Limited Company is looking to invest in a project. The cost of that project is $60,000 and the cash inflows and outflows of the project for 5 years, are shown in Table 1 below. The company’s WACC is 7%. Years Cash Inflows Cash Outflows 0 (Initial Outlay) $60,000.00 1 $20,000.00 $5,000.00 2 $21,000.00 $2,000.00 3 $22,000.00 $2,000.00 4 $14,000.00 $2,000.00 5 $10,000.00 $1,000.00 Calculate the Profitability Index (PI) Net Present Value (NPV), and estimate the Internal Rate of Return (IRR) of the Project using the given interest rate and 9%.
Beyer Company is considering the purchase of an asset for $320,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Year 1 Year 2 Year 3 Year 4 Year 5 Total Net cash flows $ 76,000 $ 44,000 $ 70,000 $ 250,000 $ 17,000 $ 457,000 Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal place.)
Project A as well as project B require an initial investment of $1,050,000, have a 6-year life, and have expected total cash inflows of $1,680,000. Proposal A is expected to provide an annual net cash inflow of $280,000, while the annual net cash inflows for Proposal B are as follows: Year 1 $350,000 Year 2 $315,000 Year 3 $280,000 Year 4 $280,000 Year 5 $245,000 Year 6 $210,000 Determine the cash payback period for each proposal. Round your answers to two decimal places. Cash Payback Period Proposal A fill in the blank 1 years Proposal B fill in the blank 2 years

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