Chapter 3, Problem 3BIC

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.

Fuente, Inc., has identified an investment project with the following cash flows.   Year   Cash Flow   1     $ 1,075     2       1,210     3       1,340     4       1,420       a. If the discount rate is 8 percent, what is the future value of the cash flows in Year 4? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. If the discount rate is 11 percent, what is the future value of the cash flows in Year 4? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. If the discount rate is 24 percent, what is the future value of the cash flows in Year 4? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

The treasurer of Tropical Fruits, Inc., has projected the cash flows of Projects A, B, and C as follows:      Project A Project B   Project C             0   200,000 365,000   200,000             1   129,000 226,000   139,000             2   129,000 226,000   109,000                                     Suppose the relevant discount rate is 8 percent per year. a. Compute the profitability index for each of the three projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)    Profitabilityindex Project A   Project B   Project C     b. Compute the NPV for each of the three projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)    NPV Project A $ Project B $ Project C $   c. Suppose these three projects are independent. Which project(s) should the company accept based on the profitability index rule?    Project A Project B Project…

You have been offered the opportunity to invest in a project that will pay$3,509per year at the end of years one through three and$6,911per year at the end of years four and five. These cash flows will be placed in a saving account that pays11.95percent per year. What is the future value of this cash flow pattern at the end of year five? Round the answer to two decimal places. Your Answer:

Zaharah Electronics Sdn. Bhd. is evaluating its cash conversion cycle of eight years, and has  estimate each of its components as follows:  [Zaharah Electronics Sdn. Bhd. sedang menilai kitaran penukaran tunainya untuk tempoh lapan tahun, dan telah  menganggarkan setiap komponennya seperti berikut:]  Table 4: The Financial Determinants of Zaharah Sdn. Bhd. Cash Conversion Cycle for 2013  to 2020.  [Jadual 4: Penentu Kewangan bagi Kitaran Penukaran Tunai Zaharah Sdn. Bhd. untuk 2013 hingga 2020.]  Financial   Determinants Years 2013  2014  2015  2016  2017  2018  2019  2020 Day of sales   turnover (DSO) 49.64  days 38.69  days 33.14   days 26.57   days 26.66   days 32.01   days 32.74   days 35.59   days Days of sales of  inventory (DSI) 7.10  days 7.17  days 5.79   days 3.99   days 9.22   days 7.75   days 4.20   days 4.65   days Days of payable  outstanding (DPO) 62.34  days 64.92  days 62.07   days 72.87   days…

Below are two schedules of prospective operating cash inflows, each of which requires the same net initial investment of $18,000 now:                      Plan A                                                  Plan B                           Year 1                                          $2,000                                                 $3,000                           Year 2                                            3,000                                                    5,000                           Year 3                                            4,000                                                    9,000                           Year 4                                            7,000                                                    5,000                           Year 5                                            9,000                                                    3,000                                   Total                                   $25,000…

Assume that you will receive $2,000 a year in Years 1 through 5, $3,000 a year in Years 6through 8, and $4,000 in Year 9, with all cash flows to be received at the end of the year. Ifyou require a 14 percent rate of return, what is the present value of these cash flows? a. $ 9,851b. $13,250c. $11,714d. $15,129e. $17,353

Find the modified internal rate of return (MIRR) for the following series of future cash flows if the company is able to reinvest cash flows received from the project at an annual rate of 11.59 percent. The initial outlay is $ 398,400. Year 1: $194,000; year 2: $161, 100; year 3; $132,200; year 4: $175, 500; year 5: $ 199,000. Round the answer to two decimal places.

The ABC Company has contracted to make the following payments: 500,000 immediately; 50,000 at the end of year 1; 75,000 at the end of year 2; 100,000 at the end of year 3; 125,000 at the end of year 4; 150,000 at the end of year 5. What fixed amount of money should the company plan to set aside each year, at 8% interest per year, compounded annually, in order to make the above payments? Draw cash flow diagram.