Question

23-9 Mimulus Inc. isco Proves is considering a capital investment of $300.000 in procedimes. The who residual value. Depec s pected to have a useful life of five years with no residual value. De h ty the flows are expecte d y the life of the investment, annual print and cash acetate durante 100 Mimulus has a 15% cost of capital rate, which is the minimum ac The C machinery is expe method. During the respectively. Mim investment. Instructions ed to be Round to two decimals.) (1) the annual rate of return, and (2) the cash payback period on the propose ng the discounted cash flow technique, calculate the net present value. (a) Calculate: (), (b) Using the disa E23-10 Calibra follows: Calibrachoa Corp. is considering three capital expenditure projects. Relevant data for the projects rojects. Relevant data for the project Det 22 Life of Project 6 years 9 years Project Investment Annual Income $240,000 $13,300 270,000 19.000 24 288,000 18.400 8 years income is constant over the life of the project. Each project is expected to have seto residual value Calibrachoa Corp. uses the straight-line method of depreciation. Annual income i Instructions Determine the internal rate of return for each project. Round the internal rate of return factor to three decimals. If Calibrachoa Corp's minimum required rate of return is 10%, which projects are acceptable?

Answer 1

A. В C Е Particulars P-23 1 P-22 P-24 а -$240,000 $53,300 -$288,000 $54,400 $54,400 $54,400 $54,400 $54,400 $54,400 $54,400 $54,400 -$270,000 $49,000 $49,000 $49,000 $49,000 $49,000 $49,000 $49,000 $49,000 $49,000 Investment Cash inflow: 1 $53,300 2 $53,300 5 $53,300 $53,300 б 4 7 5 $53,300 6 7 10 11 12 11.125% 10.211% IRR 8.874% 13 14 b Project 23 and 24 are acceptable. et LO LO st N

A. C Е Particulars P-24 1 P-22 P-23 а -270000 Investment Cash inflow: 1 -240000 -288000 2 =13300+(240000/6) 19000+(270000/9) 18400+(2880o00/8) 13300+(240000/6) 19000+(270000/9) 18400+ (288000/8) 13300+(240000/6) 19000+(270000/9) 18400+ (288000/8) 13300+(240000/6) 19000+(270000/9) 18400+ (288000/8) 13300+(240000/6) 19000+(270000/9) 18400+ (288000/8) 13300+(240000/6) 19000+(270000/9) 18400+ (288000/8) 3 2 33 5 б 5 7 б |-19000+(270000/9) 18400+ (288000/8) 19000+(270000/9) 18400+(288000/8) 7 10 19000+(270000/9) |=IRR(D2:D11) 11 =IRR(C2:C11) =IRR(E2:E11) 12 IRR 13 Project 23 and 24 are acceptable. 14 b