The Time Clock Co. is trying to decide which one of two projects it should accept. Both projects have the same start-up costs. Project 1 will produce annual cash flows of $61,000 a year for seven years. Project 2 will produce cash flows of $45,000 a year for fourteen years. The company requires an 11 percent rate of return. Which project should the company select and why

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A: Internal rate of return can be defined as the capital budgeting technique which brings down the net…

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A: Accounting rate of return= Average annual operating income from asset/ initial investment

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A: Payback period:  The payback period (PBP) is an investment assessment approach that determines how…

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A:

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A: Net present value is the method of capital budgeting which is used for assessment of investment…

Q: A firm has only $10,000 to invest and must choose between two projects. Project A returns $12,400…

A: Present value of invested amount= $10,000 Project A future value (return)= $12,400 after 1 year…

Q: CreditCard Ltd, an credit card processor is considering the selection of one from two mutually…

A:

Q: CreditCard Ltd, an credit card processor is considering the selection of one from two mutually…

A:

Q: A company just paid $10 million for a feasibility study. If the company goes ahead with the project,…

A: Initial cost = $100 million in year 0 and $20 million in year 1 CF2 = $80 million CF3 = $90 million…

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A: YEAR CASHFLOW A cashflow Y 1 42000 48000 2 42000 48000 3 42000 48000 4 42000 48000 5 42000…

Q: Blossom Corp. management is planning to convert an existing warehouse into a new plant that will…

A: The payback period is the amount of time it takes to recover the initial cash outflow. The NPV is…

Q: One of the companies is setting up a project to build housing units in which the investment volume…

A: Capital budgeting techniques: Capital budgeting techniques are tools that are used to evaluate or…

Q: A firm is considering a project with a 5-year life and an initial cost of $1,000,000. The discount…

A: Initial cost = -$1000000 After tax cash flow Year 1 – 3 = 2500*120 = $300,000 Abandon option, After…

Q: Giant Equipment Ltd. is considering two projects to invest next year. Both projects have the…

A: Excel Spreadsheet:

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A: The point where total revenues are equal to total expenses incurred from production is called the…

Q: Giant Equipment Ltd. is considering two projects to invest next year. Both projects have the same…

A: present value formula: present value annuity ordinary=A×1-11+rnr present value annuity…

Q: A company just paid $10 million for a feasibility study. If the company goes ahead with the project,…

A: Net present value is the difference of all the discounted cash inflows and outflows.

Q: Assume the following facts:• A project will cost $45,000 to develop.• When the system becomes…

A: Computation:

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

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A: Future worth refers to the value of the amount in future which is deposited or received today at…

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A:

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A: Annual present value is the sum total of discounted values of initial investment and cash inflows.

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A: Profitability index is a technique to estimate the payoff from an investment or project. It is used…

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A: Cost of goods sold = Sales x 60% = $10000 x 60% = $6,000

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A: Cost of project = $200,000 Revenue = $40,000  Additional revenue = $20,000 and decline by $4,000

Q: XYZ is considering an investment which will cost $259,000. The investment produces no cash flows for…

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A: ARR is accounting rate of return method for evaluation of investment projects. This is calculated by…

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A: In order to know which project to be selected one has to find the Net present value.

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A: Given information: Cost of the equipment is $1,750,000 Expected cash flows over 4 years is…

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Q: A firm has only $10,000 to invest and must choose between two projects. Project A returns $12,400…

A: Return on investment represents income earned by the company on the investment made.

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A: The computation of the NPV of the project below:

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A: In case of mutually exclusive alternatives company shall select that project that has highest IRR or…

Q: Jasmine Manufacturing is considering a project that will require an initial investment of $49,400…

A: The payback period is the estimated period in which the investment is expected to be returned fully.…

Q: Before evaluating the economic merits of a proposed investment, the XYZCorporation insists that its…

A: Cash-Flow diagram shows cash flows that an investment proposal will generate over its life. Cash…

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A: Net Present Value is the difference between the current value of cash inflow and cash outflow for a…

Q: Lithium, Inc. is considering two mutually exclusive projects, A and B. Project A costs $100,000 and…

A: NPV is the difference between the present value of cash inflows and present value of cash outflows…

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A: The Present value of cash flows discounted at 6%  =…

Q: Chandler Tire Co. is trying to decide which one of two projects it should accept. Both projects have…

A: As per the time value of money concept, individuals prefer to receive a sum of money at the earliest…

Q: Golden Co. is studying a project that would have a 10-year life and would require a $370,000…

A: The payback period will be used to evaluate projects and determine the number of years it will take…

Q: You are considering a project with an initial cost of $7,500. What is the payback period for this…

A: Given: Year Cash Flows 0 -7500 1 1100 2 1640 3 3800 4 4500

Q: A firm has only $10,000 to invest and must choose between two projects. Project A returns $12,400…

A: In this question, we have to calculate the rate of return in each alternative to choose one…

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.