Swapple Inc. is considering a capital project involving a $40,000 investment in machines and a $40,000...
Swapple Inc. is considering a capital project involving a $40,000 investment in machines and a $40,000 investment in working capital. The equipment is estimated to produce a net cash benefit of $12,000 for each of the next five years. The $40,000 investment in working capital will be recovered at the end of five years. The company has a cost of capital of 14%. Given the present value of an annuity of $1 for five periods at 14% is 3.43308 and the present value of $1 at 14% received after 5 periods is 0.51937, what is the net present value of the investment?
Homework Answers
Present value of inflows=$12000*Present value of annuity factor(14%,5)+$40,000*Present value of discounting factor(14%,5)
=12000*3.43308+40,000*0.51937
=61971.76
Present value of outflows=(40,000+40,000)=$80,000
NPV=Present value of inflows-Present value of outflows
=61971.76-80,000
=(18028.24)(Negative).
Add Answer to:
Swapple Inc. is considering a capital project involving a
$40,000 investment in machines and a $40,000...
Slick Company is considering a capital project involving a $225,000 investment in machinery and a $45,000...
Slick Company is considering a capital project involving a $225,000 investment in machinery and a $45,000 investment in working capital. The machine has an expected useful life of 10 years and no salvage value. The annual cash inflows (before taxes) are estimated at $90,000 with annual cash outflows (before taxes) of $30,000. The company uses straight-line depreciation. Assume the federal income tax rate is 40%. The company's new accountant computed the net present value of the project using a minimum...
Slick Company is considering a capital project involving a $225,000 investment in machinery and a $45,000...
Slick Company is considering a capital project involving a $225,000 investment in machinery and a $45,000 investment in working capital. The machine has an expected useful life of 10 years and no salvage value. The annual cash inflows (before taxes) are estimated at $90,000 with annual cash outflows (before taxes) of $30,000. The company uses straight-line depreciation. Assume the federal income tax rate is 40%. The company's new accountant computed the net present value of the project using a minimum...
Lincoln Financial is considering an investment proposal that will require the purchase of $80,000 of machinery...
Lincoln Financial is considering an investment proposal that will require the purchase of $80,000 of machinery and initial investment in working capital of $40,000. The proposal is expected to yield cash flows and income (before depreciation and taxes) of $48,000 annually for four years. Depreciation is to be taken for tax purposes using the straight-line method and no salvage value. The investment in working capital will be recovered at the end of four years. The company will not accept a...
ildhorseCompany is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup...
ildhorseCompany is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts Initial investment $340000 $420000 Annual net income 30000 46000 Net annual cash inflow 110000 146000 Estimated useful life 5 years 6 years Salvage value 0 0 The company requires a 10% rate of return on all new investments. Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.89 3.791 3.696 3.605 6 4.486 4.355 4.231 4.111 The net...
MarigoldCompany is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup...
MarigoldCompany is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts Initial investment $305000 $504000 Annual net income 30000 46000 Net annual cash inflow 110000 146000 Estimated useful life 5 years 6 years Salvage value 0 0 The company requires a 10% rate of return on all new investments. Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.89 3.791 3.696 3.605 6 4.486 4.355 4.231 4.111 The cash...
Whispering WindsCompany is considering two capital investment proposals. Estimates regarding each project are provided below: Project...
Whispering WindsCompany is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts Initial investment $430000 $588000 Annual net income 30000 46000 Net annual cash inflow 110000 146000 Estimated useful life 5 years 6 years Salvage value 0 0 The company requires a 10% rate of return on all new investments. Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.89 3.791 3.696 3.605 6 4.486 4.355 4.231 4.111 The...
MetlockCompany is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup...
MetlockCompany is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts Initial investment $320000 $576000 Annual net income 30000 46000 Net annual cash inflow 110000 146000 Estimated useful life 5 years 6 years Salvage value 0 0 The company requires a 10% rate of return on all new investments. Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.89 3.791 3.696 3.605 6 4.486 4.355 4.231 4.111 The cash...
Telecom Italia is considering the investment in a capital project. The initial cost in year 0...
Telecom Italia is considering the investment in a capital project. The initial cost in year 0 is $130,000 to be depreciated straight over 5 years to an expected salvage value of $15,000. The firm’s tax rate is 35% and it has a 10% cost of capital (the firm's discount rate, or "hurdle" rate). For this project an additional investment in working capital of $12,000 is required and it will be recovered in full at the end of the project’s life....
Skysong Company is considering two capital investment proposals. Estimates regarding each project are provided below: &nbs
Skysong Company is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts Initial investment $400,000 $600,000 Annual net income $18,000 34,000 Net annual cash inflow $96,000 119,000 Estimated useful life 5 years 6 years Salvage 0 0 The company requires a 10% rate of return on all new investments Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.89 3.791 3.696 3.605 6 4.486 4.355 ...
Multiple Choice Question 114 CullumberCompany is considering two capital investment proposals. Estimates regarding each project are...
Multiple Choice Question 114
CullumberCompany is considering two capital investment
proposals. Estimates regarding each project are provided
below:
Project Soup
Project Nuts
Initial investment
$200000
$400000
Annual net income
16000
46000
Net annual cash inflow
60000
97000
Estimated useful life
5 years
6 years
Salvage value
0
0
The company requires a 10% rate of return on all new
investments.
Present Value of an
Annuity of 1
Periods
9%
10%
11%
12%
5
3.89
3.791
3.696
3.605
6
4.486
4.355...
Slick Company is considering a capital project involving a $225,000 investment in machinery and a $45,000 investment in working capital. The machine has an expected useful life of 10 years and no salvage value. The annual cash inflows (before taxes) are estimated at $90,000 with annual cash outflows (before taxes) of $30,000. The company uses straight-line depreciation. Assume the federal income tax rate is 40%. The company's new accountant computed the net present value of the project using a minimum...
Slick Company is considering a capital project involving a $225,000 investment in machinery and a $45,000 investment in working capital. The machine has an expected useful life of 10 years and no salvage value. The annual cash inflows (before taxes) are estimated at $90,000 with annual cash outflows (before taxes) of $30,000. The company uses straight-line depreciation. Assume the federal income tax rate is 40%. The company's new accountant computed the net present value of the project using a minimum...
Multiple Choice Question 114
CullumberCompany is considering two capital investment
proposals. Estimates regarding each project are provided
below:
Project Soup
Project Nuts
Initial investment
$200000
$400000
Annual net income
16000
46000
Net annual cash inflow
60000
97000
Estimated useful life
5 years
6 years
Salvage value
0
0
The company requires a 10% rate of return on all new
investments.
Present Value of an
Annuity of 1
Periods
9%
10%
11%
12%
5
3.89
3.791
3.696
3.605
6
4.486
4.355...
Most questions answered within 3 hours.
-
Lab #2 Address Book Unsorted List (C++)
Using classes, design an online address book to keep...
asked 7 minutes ago -
Tucson Machinery, Inc., manufactures numerically controlled
machines, which sell for an average price of $0.5 million...
asked 23 minutes ago -
Review the referenced paper by Melse (2008). Describe the
research question being addressed. Discuss the methods...
asked 28 minutes ago -
Please do all parts. I don't want to hear your as per guidelines
stuff. Do if...
asked 37 minutes ago -
1. Why is Hardy-Weinberg Theorum important? How can we
test whether a population is in H-W...
asked 37 minutes ago -
A sample of 3 is selected from 9 cards. How many permutation is
possible? Show Work.
asked 51 minutes ago -
Identify a commercial data mining software product (e.g., SAS)
and an open-source data mining product (e.g.,...
asked 54 minutes ago -
Following are the capital account balances for the William,
Jennings, and Bryan partnership:
William (40% of...
asked 45 minutes ago -
An investment project provides cash inflows of $770 per year for
11 years.
a. What is...
asked 54 minutes ago -
About the lecture of human resource management, give me the
process and schedule of how the...
asked 52 minutes ago -
A fair D10 die is rolled 100 times. What is the probability of
rolling five 1s,...
asked 1 hour ago -
Other than hydrogen bonding, what is the major interaction that
causes proteins to fold into compact,...
asked 1 hour ago