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- Suppose Omni Consumer Products's CFO is evaluating a project with the following cash inflows. She does not know the project's initial cost; however, she does know that the project's regular payback period is 2.5 years. Year Cash Flow Year 1 $350,000 Year 2 $400,000 Year 3 $475,000 Year 4 $475,00 If the project's weighted average cost of capital (WACC) is 9%, what is its NPV? $373,562 $336,206 $317,528 $429,5965) The University has just invested $9,000 in a new desktop publishing system. From past experience, annual cash returns are estimated as A(t) $8000 - $4000(1 + 0.15)t- 1 S(t) $6000(1 0.3)t where A(t) stands for the net cash flow in period t and S(t) stands for the salvage value at the end of year t, and t 2 1. If the MARR is 12%, compute the annual equivalent cost in year 2Q1) The following figures indicate to cash flows for project (X, Y, Z) respectively. project Z: Project X :r=11% cash flow (CF) project Y: r=11% cash flow (CF) r=11% year cash flow (CF) -999 -342 -10202 1 290 105 1300 310 105 1390 3 315 115 1690 4 810 119 2460 5 820 290 2600 825 390 2890 7 905 420 2989 6.
- A grateful donor wishes to start an endowment at her alma mater that will provide scholarship money of $40,000 per year beginning now (time 0) and continue indefinitely. If the funds earn 10% per year, the amount she must donate now is closest to:a. $340,000b. $400,000c. $440,000d. $493,800Solve with complete solution and draw the cash flow diagram A project your firm is considering for implementation has these estimated costs and revenues: an investment cost of $50,000; maintenance costs that start at $5,000 at the end of year (EOY) 1 and increase by $500 each year until year 10 ; savings of $20,000 per year (EOY 1–10); and finally a resale value of $35,000 at the EOY 10. If the project has a 10-year life and the firm’s MARR is 10% per year a) what is the present worth of the project? PW = $___ b) What is the Future Worth of this project? FW = $___ c) What is IRR ? IRR = ___ % d) Is it a sound investment opportunity? YES or NO e) Determine the Discounted Payback? ____ 5 years Note: For equivalent worth, round off the final answer to whole number. For Rate of Return, round off to two decimal places (in percentage)15. You want to open a new business but for the first 3 years you wont make any income as it takes time for the paperwork and approvals to process. After your business is up and running, you will make $75,000 per year forever. What is the capitalized cost of the income at 8% per year? What does the capitalized cost represent in layman terms?
- Required information A process for producing the mosquito repellant Deet has an initial investment of $205,000 with annual costs of $53,000. Income is expected to be $90,000 per year. What is the payback period at /= 0% per year? At/ 12% per year? (Note: Round your answers to the nearest integer.) The payback period at / 0% is determined to be years. The payback period at i= 12% is determined to be years.If mutually exclusive projects with normal cash flows are being analyzed, the net present value (NPV) and internal rate of return (IRR) methods always agree. Projects Y and Z are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows. Year Project Y Project Z 0 -$1,500 -$1,500 1 $200 $900 2 $400 $600 3 $600 $300 4 $1,000 $200 NPV (Dollars) 800 600 Project Y 400 Project Z 200 -200 0246 8 10 12 14 16 18 20 COST OF CAPITAL (Percent) If the weighted average cost of capital (WACC) for each project is 14%, do the NPV and IRR methods agree or conflict? O The methods agree. O The methods conflict.Example: A new process for a manufacturing process will have a first cost of $55,000 with annual costs of $38,000. Extra income associated with the new process is expected to be $62,000 per year. What is the payback period at i= 12% per year? a) 2.29 b) 3.00 c) 6.00 d) 2.14 CITI
- Here are the data for an asset that is being considered: Initial cost=$35,000 Salvage value at 5 years=$5000 Rebuild cost at 3 years=$25,000 Annual net cash flow=$22,000 per year What is the ROR for this asset? (You can use the excel function "IRR" for this problem) a)53.0% b)41.0% c)43.9% d)42.8%Analyze a CSR capital investment proposal for Ganon Inc. Ganon Inc. is evaluating a proposal to replace its HID (high intensity discharge) lighting with LED (light emitting diode) lighting throughout its warehouse. LED lighting consumes less power and lasts longer than HID lighting for similar performance. The following information was developed: Line Item Description Value HID watt hour consumption per fixture 500 watts per hr. LED watt hour consumption per fixture 300 watts per hr. Number of fixtures 800 Lifetime investment cost (in present value terms) to replace each HID fixture with LED $300 Operating hours per day 10 Operating days per year 300 Metered utility rate per kilowatt-hour (kwh)* $0.12 *Note: A kilowatt-hour is equal to 1,000 watts per hour. a. Determine the investment cost for replacing the 800 fixtures.fill in the blank 1 of 1$ b. Determine the annual utility cost savings from employing the new energy solution.fill in the blank 1 of 1$ c. Should…Net present value (NPV) of the project =Single payoff x PVIAF (10.20%, 9 years) - initial outlay = $6,947 x 0.42340 - $2,182 = $759.39 What's the equation for the bolded item?