ZuoTi.Pro
Question

Please use the following information to answer the remaining problems: Able Corporation has a project with...

Please use the following information to answer the remaining problems: Able Corporation has a project with the following cash flows and an 9.6% cost of money: Numbers in parentheses are outflows. Both Year 0 and Year 3 cash flows are outflows. Year 0 1 2 3 4 5 6 Cash flow $(351,000) $ 95,000 $186,000 $(300,000) $ 280,000 $260,000 $268,000 23. Please calculate the net present value $175,730.78 24. Please calculate the profitability indexes (two decimals please) 1.50 25. Please calculate the modified profitability index using the terminal value approach in the textbook (two decimals please) 1.20 26. Please calculate the internal rate of return (two decimals please) 21.13% 27. Please calculate the modified internal rate of return (two decimals please and per the book)________________________ 28. Please calculate the payback period (two decimals please)________________________ 29. Please calculate the present value payback period (two decimals please)______________________

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Since the question involves massive calculations, I am using excel.

H с 0 E Cumulative Discount Cumulative Cash flows DCF Cash flows factor DCF Cumulative CDF D= CxDF Cumulative D (351,000) (35

You already have got the correct answers for the earlier questions. Hence, I am not addressing them.

27. Please calculate the modified internal rate of return (two decimals please and per the book) = 14.55% (Please see the table above, adjacent cell contains the formula in excel used to get the answer)

28. Please calculate the payback period (two decimals please): Please see the cumulative cash flows. Please see the cells highlighted in yellow color. Hence, payback period = 4 + 90,000 / 260,000 = 4.35 years

29. Please calculate the present value payback period (two decimals please): Please see the cumulative DCFs. Please see the cells highlighted in green color. Hence, present value payback period = 4 + 143,298.39 / 164,407.10 = 4.87 years

= 4.35 years

0 0
Add a comment
Know the answer?
Add Answer to:
Please use the following information to answer the remaining problems: Able Corporation has a project with...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Please solve it by hand so that I can understand the steps. 6. A project has...

    Please solve it by hand so that I can understand the steps. 6. A project has the following total (or net) after-tax cash flows.                ____________________________________________________         Year             Total (or net) after-tax cash flow                ____________________________________________________                   1 $1,000,000 2 1,500,000 3 2,000,000 4 2,500,000                   _______________________________________________________ The required rate of return on the project is 15 percent. The initial investment (or initial cost or initial outlay) of the project is $4,000,000. a) Find the (regular) payback period of...

  • Please use Excel to solve! Ne Present Value and Other Capital Budgeting Measures 5. Consider a...

    Please use Excel to solve! Ne Present Value and Other Capital Budgeting Measures 5. Consider a project that has the following cash flows: initial cash flow (t-0) --$100,000; cash flows years 1 to 5 (t-1-5) - $10,000 per year, cash flows years 6 to 10 (t-6-10) - $20,000 per year. If the required return on the project is 6%, calculate the following: a. Internal Rate of Return (IRR)? b. Net Present Value (NPV)? c. Profitability index (PI)? d. Payback period?

  • A firm is planning a new project that is projected to yield cash flows of -$515,000...

    A firm is planning a new project that is projected to yield cash flows of -$515,000 in Year 1, $586,000 per year in Years 2 through 3, and $678,000 in Years 4 through 6, and $728,000 in Years 7 through 10. This investment will cost the company $2,780,000 today (initial outlay). We assume that the firm's cost of capital is 9.65%. (1) Draw a time line to show the cash flows of the project. (2) Compute payback period, net present...

  • Capital Budgeting Analysis : A firm is planning a new project that is projected to yield cash flo...

    Capital Budgeting Analysis : A firm is planning a new project that is projected to yield cash flows of - $595,000 in Year 1, $586,000 per year in Years 2 through 5, and $578,000 in Years 6 through 11. This investment will cost the company $2,580,000 today (initial outlay). We assume that the firm's cost of capital is 11%. (1) Draw a timeline to show the cash flows of the project. (2) Compute the project’s payback period, net present value...

  • Which of the following is the discount rate that makes the present value of the estimated cash flows equal to the initia...

    Which of the following is the discount rate that makes the present value of the estimated cash flows equal to the initial cost of the investment? Modified internal rate of return Internal rate of return Discounted payback period Payback period Net present value

  • Fatima Corporation has the following information pertaining to the purchase of a new piece of equipment:...

    Fatima Corporation has the following information pertaining to the purchase of a new piece of equipment: Cash revenues less cash expenses $40,000 per year Cost of equipment Salvage value at the end of the year Increase in working capital requirements $70,000 $7,000 $30,000 Tax rate Life 30 percent 6 years Cost of capital is 11 percent. Required (use excel): a. Calculate the following assuming straight-line depreciation: i. Calculate the after-tax net income for each of the six years. ii. Calculate...

  • Capital Budgeting: Homework 1. Waste Management has a WACC of 12 percent and it is considering a project with a cost of...

    Capital Budgeting: Homework 1. Waste Management has a WACC of 12 percent and it is considering a project with a cost of $52,125. The project’s expected net cash inflows are $12,000 per year for 8 years. What is the project’s payback period? What is the project’s net present value (NPV)? What is the profitability index? What is the project’s internal rate of return (IRR)? What is the project’s modified internal rate of return (MIRR)?

  • 1. A project has an initial cost of $27,400 and a market value of $32,600. What...

    1. A project has an initial cost of $27,400 and a market value of $32,600. What is the difference between these two values called? A. net present value B. internal return C. payback value D. profitability index E. discounted payback 2. What is the net present value of a project with the following cash flows if the required rate of return is 9 percent? Year Cash Flow -$42,398 18,201 21,219 17,800 A. -$1,574.41 B. -$1,208.19 C. $5,904.65 D. $6,029.09 E....

  • 0 1 2 3 4 Total initial investment ($457,000) Operating Cash Flows Unit sales 250,000 250,000 250,000 250,000 Price per unit $2.50 $2.50 $2.50 $2.50 Total reve...

    0 1 2 3 4 Total initial investment ($457,000) Operating Cash Flows Unit sales 250,000 250,000 250,000 250,000 Price per unit $2.50 $2.50 $2.50 $2.50 Total revenues $        625,000 $        625,000 $        625,000 $        625,000 Total costs $        236,400 $        186,000 $        312,000 $        345,600 Operating income $        388,600 $        439,000 $        313,000 $        279,400 Taxes on operating income             136,010             153,650             109,550               97,790 After-tax operating income $        252,590 $        285,350 $        203,450 $        181,610 Operating cash flow $        113,990 $          ...

  • You are considering a project that will require an initial outlay of $200,000. This project has...

    You are considering a project that will require an initial outlay of $200,000. This project has an expected life of four years and will generate after-tax cash flows to the company as a whole of $60,000 at the end of each year over its five-year life. Thus, the free cash flows associated with this project look like this: Year Free Cash Flow 0 -150,000 1 60,000 2 60,000 3 60,000 4 60,000 Given a required rate of return of 10%...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT