Homework Answers
| a. Computation of Excess PV Index- Highpoint | |||
| Proposal | Required Investment (a) | PV at After Cash Flow (b) | Excess PV Index ( b/a) |
| A | $265,000.00 | $305,030.00 | 1.15 |
| B | $195,000.00 | $231,780.00 | 1.19 |
| C | $155,000.00 | $168,040.00 | 1.08 |
| D | $175,000.00 | $211,300.00 | 1.21 |
| E | $123,000.00 | $131,990.00 | 1.07 |
| b. Computation of Average Rate of Return | |||||
| Proposal | Required Investment (a) | salvage value (b=aX10%) |
Average investment C=(a+b)/2 |
Avg. Annual net Income (d) |
Average ROR (d/c) |
| A | $265,000.00 | $26,500.00 | $145,750.00 | $37,400.00 | 25.66% |
| B | $195,000.00 | $19,500.00 | $107,250.00 | $26,000.00 | 24.24% |
| C | $155,000.00 | $15,500.00 | $85,250.00 | $19,200.00 | 22.52% |
| D | $175,000.00 | $17,500.00 | $96,250.00 | $27,600.00 | 28.68% |
| E | $123,000.00 | $12,300.00 | $67,650.00 | $14,960.00 | 22.11% |
| Part-c | ||
| Using Excess PI Index , Highpoint should accept following Proposal B&D | ||
| Using Average ROR , Highpoint should accept following Proposal D &A | ||
| Dear student kindly let me know, if you are having any doubt and please mark with positive rating., Thanks in advance |
Add Answer to:
Highpoint Company is evaluating five different capital expenditure proposals. The company's hurdle rate for net present...
Excess Present Value Index and Average Rate of Return Highpoint Company is evaluating five different capital...
Excess Present Value Index and Average Rate of Return Highpoint Company is evaluating five different capital expenditure proposals. The company's hurdle rate for net present value analyses is 12%. A 10% salvage value is expected from each of the investments. Information on the five proposals is as follows: Proposal Required Investment PV at 12% of After-Tax Cash Flows Avg. Annual Net Income from Investment $275,000 $315,030 $37,400 205,000 241,780 26,000 165,000 178,040 19,200 185,000 221,300 27,600 133,000 141,990 14,960 a....
Excess Present Value Index and Average Rate of Return Highpoint Company is evaluating five different capital...
Excess Present Value Index and Average Rate of Return Highpoint Company is evaluating five different capital expenditure proposals. The company's hurdle rate for net present value analyses is 12%. A 10% salvage value is expected from each of the investments. Information on the five proposals is as follows: Proposal Required Investment PV at 12% of After-Tax Cash Flows Avg. Annual Net Income from Investment $270,000 $310,030 $37,400 200,000 236,780 26,000 160,000 173,040 19,200 180,000 216,300 27,600 128,000 136,990 14,960 a....
Net Present Value Analysis Anderson Company must evaluate two capital expenditure proposals. Anderson's hurdle rate is...
Net Present Value Analysis Anderson Company must evaluate two capital expenditure proposals. Anderson's hurdle rate is 12%. Data for the two proposals follow. Proposal X Proposal Y Required investment $300,000 $300,000 Annual after-tax cash inflows 60,000 After-tax cash inflows at the end of years 3, 6, 9, and 12 180,000 Life of project 12 years 12 years Using net present value analysis, which proposal is the more attractive? Do not use negative signs with your answers. Round PV answers to...
Weighted Average Cost of Capital and Net Present Value Analysis Reed Incorporated is considering a proposal...
Weighted Average Cost of Capital and Net Present Value Analysis Reed Incorporated is considering a proposal to acquire new equipment for its manufacturing division. The equipment will cost $192,000, be useful for four years, and have a $12,000 salvage value. Reed expects annual savings in cash operating expenses (before taxes) of $68,000. For tax purposes, the annual depreciation deduction will be $64,000, $86,000, $28,000, and $14,000, respectively, for the four years (the salvage value is ignored on the tax return)....
Cash Payback Anderson Company must evaluate two capital expenditure proposals. Anderson's hurdle rate is 12%. Data...
Cash Payback Anderson Company must evaluate two capital expenditure proposals. Anderson's hurdle rate is 12%. Data for the two proposals follow. Proposal X Proposal Y Required investment $540,000 $540,000 Annual after-tax cash inflows 54,000 After-tax cash inflows at the end of years 3, 6, 9, and 12 136,000 Life of project 12 years 12 years What is the cash payback period for Proposal X? For Proposal Y? Hint: For Proposal Y, in what year (3, 6, 9 or 12) will...
Cash Payback Anderson Company must evaluate two capital expenditure proposals. Anderson's hurdle rate is 12%. Data...
Cash Payback Anderson Company must evaluate two capital expenditure proposals. Anderson's hurdle rate is 12%. Data for the two proposals follow. Proposal X Proposal Y Required investment $300,000 $300,000 Annual after-tax cash inflows 30,000 After-tax cash inflows at the end of years 3, 6, 9, and 12 75,000 Life of project 12 years 12 years What is the cash payback period for Proposal X? For Proposal Y? Hint: For Proposal Y, in what year (3, 6, 9 or 12) will...
Weighted Average Cost of Capital and Net Present Value Analysis Tate Company is considering a proposal...
Weighted Average Cost of Capital and Net Present Value Analysis Tate Company is considering a proposal to acquire new equipment for its manufacturing division. The equipment will cost $216,000, be useful for four years, and have a $17,000 salvage value. Tate expects annual savings in cash operating expenses (before taxes) of $73,000. For tax purposes, the annual depreciation deduction will be $72,000, $96,800, $31,500, and $15,700, respectively, for the four years (the salvage value is ignored on the tax return)....
Ranking Investment Proposals: Payback Period, Accounting Rate of Return, and Net Present Value Pr...
Ranking Investment Proposals: Payback Period, Accounting Rate of Return, and Net Present Value Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal X Proposal Y Proposal Z Initial investment $98,000 $98,000 $98,000 Cash flow from operations Year 1 90,000 49,000 98,000 Year 2 8,000 49,000 Year 3 49,000 49,000 Disinvestment 0 0 0 Life (years) 3 years 3 years 1 year (a) Select the best investment proposal using the payback period, the accounting rate...
Weighted Average Cost of Capital and Net Present Value Analysis Tate Company is considering a proposal...
Weighted Average Cost of Capital and Net Present Value Analysis Tate Company is considering a proposal to acquire new equipment for its manufacturing division. The equipment will cost $204,000, be useful for four years, and have a $15,000 salvage value. Tate expects annual savings in cash operating expenses (before taxes) of $71,000. For tax purposes, the annual depreciation deduction will be $68,000, $91,400, $29,700, and $14,900, respectively, for the four years (the salvage value is ignored on the tax return)....
Weighted Average Cost of Capital and Net Present Value Analysis Tate Company is considering a proposal...
Weighted Average Cost of Capital and Net Present Value Analysis Tate Company is considering a proposal to acquire new equipment for its manufacturing division. The equipment will cost $204,000, be useful for four years, and have a $15,000 salvage value. Tate expects annual savings in cash operating expenses (before taxes) of $71,000. For tax purposes, the annual depreciation deduction will be $68,000, $91,400, $29,700, and $14,900, respectively, for the four years (the salvage value is ignored on the tax return)....
Excess Present Value Index and Average Rate of Return Highpoint Company is evaluating five different capital expenditure proposals. The company's hurdle rate for net present value analyses is 12%. A 10% salvage value is expected from each of the investments. Information on the five proposals is as follows: Proposal Required Investment PV at 12% of After-Tax Cash Flows Avg. Annual Net Income from Investment $275,000 $315,030 $37,400 205,000 241,780 26,000 165,000 178,040 19,200 185,000 221,300 27,600 133,000 141,990 14,960 a....
Excess Present Value Index and Average Rate of Return Highpoint Company is evaluating five different capital expenditure proposals. The company's hurdle rate for net present value analyses is 12%. A 10% salvage value is expected from each of the investments. Information on the five proposals is as follows: Proposal Required Investment PV at 12% of After-Tax Cash Flows Avg. Annual Net Income from Investment $270,000 $310,030 $37,400 200,000 236,780 26,000 160,000 173,040 19,200 180,000 216,300 27,600 128,000 136,990 14,960 a....
Weighted Average Cost of Capital and Net Present Value Analysis Reed Incorporated is considering a proposal to acquire new equipment for its manufacturing division. The equipment will cost $192,000, be useful for four years, and have a $12,000 salvage value. Reed expects annual savings in cash operating expenses (before taxes) of $68,000. For tax purposes, the annual depreciation deduction will be $64,000, $86,000, $28,000, and $14,000, respectively, for the four years (the salvage value is ignored on the tax return)....
Weighted Average Cost of Capital and Net Present Value Analysis Tate Company is considering a proposal to acquire new equipment for its manufacturing division. The equipment will cost $216,000, be useful for four years, and have a $17,000 salvage value. Tate expects annual savings in cash operating expenses (before taxes) of $73,000. For tax purposes, the annual depreciation deduction will be $72,000, $96,800, $31,500, and $15,700, respectively, for the four years (the salvage value is ignored on the tax return)....
Weighted Average Cost of Capital and Net Present Value Analysis Tate Company is considering a proposal to acquire new equipment for its manufacturing division. The equipment will cost $204,000, be useful for four years, and have a $15,000 salvage value. Tate expects annual savings in cash operating expenses (before taxes) of $71,000. For tax purposes, the annual depreciation deduction will be $68,000, $91,400, $29,700, and $14,900, respectively, for the four years (the salvage value is ignored on the tax return)....
Weighted Average Cost of Capital and Net Present Value Analysis Tate Company is considering a proposal to acquire new equipment for its manufacturing division. The equipment will cost $204,000, be useful for four years, and have a $15,000 salvage value. Tate expects annual savings in cash operating expenses (before taxes) of $71,000. For tax purposes, the annual depreciation deduction will be $68,000, $91,400, $29,700, and $14,900, respectively, for the four years (the salvage value is ignored on the tax return)....
Most questions answered within 3 hours.
-
if a firm producing 100 units at $5.00 each experience
an 80% experience curve, what will...
asked 7 minutes ago -
A solid, uniform disk of radius 0.250 m and mass 53.7 kg rolls
down a ramp...
asked 2 hours ago -
Given the following table of high speed internet access vs.
annual home income:
Home Income
%...
asked 2 hours ago -
A baseball batter hits a 0.145kg baseball straight up into the
air. The baseball leaves the...
asked 3 hours ago -
An FM modulator is tested using
single-tone baseband signal with frequency of 50kHz and a sprectrum...
asked 3 hours ago -
Write the ionic equations for the first stage of salts
hydrolysis.
Anion, Cation?
Na2S
NiSO4
K2SO4...
asked 5 hours ago -
suppose there is a normally distributed population with a mean of
250 and a standard deviation...
asked 6 hours ago -
Question Three
Suppose you as project manager are using the Waterfall
development methodology on a large...
asked 7 hours ago -
Which statement is not true about welfare in Canada?
A.Benefits typically vary based on one's ability...
asked 7 hours ago -
Please help me with FLOWCHART and UML diagram for class,
thank you!
#include <iostream>
#include <fstream>...
asked 8 hours ago -
3. Describe the “logic circuit” of the Lac operon. Which
proteins are bound or not to...
asked 8 hours ago -
Ayesha’s adjusted gross income is $60,000 in 2019. She donated a
piece of artwork with a...
asked 8 hours ago