Questions 7-9 and 7-10 attached. Answer shown in Excel formula please. E7-9. Single Sum, Solving for Other Variables. Two independent situations follow. Solve for the appropriatevariable.a. Nardo Co. wants to purchase a piece of heavy equipment in seven years for $751,815. The corporationcurrently has $500,000 to invest for this purpose. Determine the rate of return (assuming annual com-pounding) required to accumulate sufficient funds to acquire the equipment at the end of the seven-yearperiod.b. Apollo Inc. decides to pay a one-time bonus of $59,702.50 to its vice president, who is expected to retirewithin the next few years. Apollo can invest $50,000 at 3% compounded annually. How many years willit take to have the $59,702.50 to pay the bonus?7.10. Ordinary Annuity, Solve for Interest Rate, Financial Calculator. Two independent situations follow.Interest is compounded annually. Solve for the appropriate interest rate using a financial calculator or aspreadsheet.a. A college student wishes to purchase a new car. In order to pay for the vehicle, he borrows $15,000 frombis parents today (beginning of the current year). Starting at the end of the current year, he must make15 equal annual payments of S1,200 each. What interest rate is the student paying his parents?b. A finance professor wishes to invest $50,000 at the end of this year. He wants his investment to grow toS200,000 in 20 years. At what interest rate must the professor invest to reach his goal?

The question is based on the concept of Financial management. As per the Bartleby guidelines we are…

Answered: Single Sum, Solving for Other…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 8P

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Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the following cash flows over the next five years: $99,000, $88,000, $92,000. $87,000, and $72,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel. see Appendix C.
Staten Corporation is considering two mutually exclusive projects. Both require an initial outlay of 150,000 and will operate for five years. The cash flows associated with these projects are as follows: Statens required rate of return is 10%. Using the net present value method and the present value table provided in Appendix A, which of the following actions would you recommend to Staten? a. Accept Project X and reject Project Y. b. Accept Project Y and reject Project X. c. Accept Projects X and Y. d. Reject Projects X and Y.
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.
The internal rate of return method is used by Royston Construction Co. in analyzing a capital expenditure proposal that involves an investment of $58,416 and annual net cash flows of $12,000 for each of the 7 years of its useful life. 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 a. Determine a present value factor for an annuity of $1, which can be used in determining the internal rate of return. If required, round your answer to three decimal places.fill in the blank 1 of 1 b. Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the internal rate of return for the proposal.fill in the blank 1 of 1 %…
The internal rate of return method is used by Testerman Construction Co. in analyzing a capital expenditure proposal that involves an investment of $106,700 and annual net cash flows of $20,000 for each of the eight years of its useful life. Present Value of an Annuity of $1 at Compound Interest 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 3.352 2.991 6 4.917 4.355 4.111 3.784 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 a. Determine a present value factor for an annuity of $1 which can be used in determining the internal rate of return. If required, round your answer to three decimal places.fill in the blank 1 b. Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the internal rate of…
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.
The internal rate of return method is used by Testerman Construction Co. in analyzing a capital expenditure proposal that involves an investment of $60,465 and annual net cash flows of $15,000 for each of the nine years of its useful life. Present Value of an Annuity of $1 at Compound Interest 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 a. Determine a present value factor for an annuity of $1 which can be used in determining the internal rate of return. If required, round your answer to three decimal places. b. Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the internal rate of return for the proposal. %
The Alfred Company has been allocated RM600,000 on investment projects for the coming year. Fourprojects, each with a four year life and with the following cash flows are currently being considered:Year 0 1 2 3 4Project RMk RMk RMk RMk RMkA -300 100 10 200 200B -200 0 0 0 400C -100 0 0 80 80D -150 60 60 60 60a) Assuming that the projects are divisible recommend to the Board, which projects should beaccepted using the Net Present Value method and evaluate the total net present value thatwould be generatedb) Discuss the impact on your analysis of each project being indivisible
The Hills Company, a calendar year company, purchased a new machine for P280,000 on January 1. Depreciation for tax purposes will be P35,000 annually for eight years. The accounting (book value) rate of return (ARR) is expected to be 15% on the initial increase in required investment. On the assumption of a uniform cash inflow, this investment is expected to provide annual cash flow from operations, net of income taxes, of Group of answer choices P40,250 P77,000 P35,000 P42,000
Precision Ltd is considering an equipment that costs $176,000, and is depreciated on a straight-line basis to zero over its 11-year useful life. The equipment is expected to be used in a 7- year project. Precision Ltd believe that at the end of the project (i.e. year 7), the company can sell the equipment for $22,000. If the tax rate is 30%, what is the net cash flow from the sale of this equipment in year 7?
Munir S/B has provided the following data concerning a proposed investment project: Initial investment.................. $861,000 Annual net cash receipts...... $271,000 Life of the project................. 5 years Salvage value...................... $129,000 The company's tax rate is 30%. For tax purposes, the straight line method will be used and capital allowances (CA)s will be claimed only over 3 years over the entire initial cost without any reduction for salvage value. The company uses a discount rate of 11%. Required: (i)Calculate the annual CAs for years 1-3
NUBD Co. purchase a machine for P180,000, which will be depreciated on the straight-line basis over a five year period with no salvage value. The related cash flow from operations, net of income taxes, is expected to be P45,000, a year. Assume that NUBD’s effective income tax rate is 40% for all years.What is the accounting rate of return on the initial increase in required investment?

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