Homework Answers
| Project | |||||
| Discount rate | 0.14 | ||||
| Year | 0 | 1 | 2 | 3 | 4 |
| Cash flow stream | -360000 | 228000 | 173000 | 135500 | 110000 |
| Discounting factor | 1 | 1.14 | 1.2996 | 1.481544 | 1.6889602 |
| Discounted cash flows project | -360000 | 200000 | 133117.9 | 91458.64 | 65128.831 |
| NPV = Sum of discounted cash flows | |||||
| NPV Project = | 129705.35 | ||||
| Where | |||||
| Discounting factor = | (1 + discount rate)^(Corresponding period in years) | ||||
| Discounted Cashflow= | Cash flow stream/discounting factor | ||||
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3. What is the Net Present Value of a capital investment project that has the following...
Mastery Problem: Net Present Value and Internal Rate of Return Part One Companies use capital investment...
Mastery Problem: Net Present Value and Internal Rate of Return Part One Companies use capital investment analysis to evaluate long-term investments. Capital investment evaluation methods that use present values are (1) Net present value method (NPV) and (2) Internal rate of return (IRR) method. Methods That Use Present Values Of the two capital investment evaluation methods, a defining characteristic NPV and IRR is that they consider the time value of money. This means that money tomorrow is worth less than money today....
Use the information in the table below for the following 5 questions. A capital investment project...
Use the information in the table below for the following 5 questions. A capital investment project is estimated to have the following after-tax cash flows, by year -$35,000 $13,000 $14.000 $15,000$16,000 The company utilizes a discount rate of 8% to evaluate capital projects. You may have rounding errors in your calculations so choose the closest answer. Assume cash flows are received equally over the year. 10) The NET PRESENT VALUE for the project shown above is: a) $13,789 b) $9,672...
Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of...
Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Warehouse Tracking Technology Year Income from Operations Net Cash Flow Income from Operations Net Cash Flow $40,000 40,000 40,000 40,000 40,000 $200,000 $128,000 128,000 128,000 128,000 128,000 $640,000 $84,000 64,000 32,000 14,000 6,000 $200,000 $205,000 173,000 122,000 83,000 57,000...
answer Comparison of Capital Budgeting Methods 1. Determine the payback period for an investment 2. Evaluate the acceptability of an investment project using the net present value method 3. Eval...
answer
Comparison of Capital Budgeting Methods 1. Determine the payback period for an investment 2. Evaluate the acceptability of an investment project using the net present value method 3. Evaluate the acceptability of an investment project using the internal rate of return method. 4. Compute the simple rate of return for an investment FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW LEH Sign In в r u . B- 5- Number Formation 1 Format as Styles. Alignment Cells Editing...
Part Two Net Present Value Method Net present value (NPV) is one method that can be...
Part Two Net Present Value Method Net present value (NPV) is one method that can be used to evaluate the financial viability of potential projects. It determines the present value of all future cash flows associated with potential projects and measures this against the cost of the project. To use net present value, a required rate of retum must be defined. The required rate of return is the minimum acceptable rate of return that an investment must yield for it...
Average rates of Return Method, Net Present Value Method, and And The capital investment committee of...
Average rates of Return Method, Net Present Value Method, and And The capital investment committee of Ellis Transport and Storage Inc. is considering two The estimated income from operations and net cash flows from each investment are as follows: Tracking Technology Year Income from Net Cash $251.000 wNw Warehouse Income from Net Cash Operations Flow $52,200 $157,000 52,200 157,000 52,200 157,000 52,200 157,000 52,200 157,000 $261,000 $785,000 34,000 212.000 149.00 42,000 18,000 7.000 Total 61,000 $785,000 Each project requires an...
1. Which of the following capital investment evaluation methods use present values? A. Net present value...
1. Which of the following capital investment evaluation methods use present values? A. Net present value method B.Average rate of return method C. Both "Net present value method" and "Average rate of return method" D. Neither "Net present value method" nor "Average rate of return method" 2. A common characteristic found in capital investment evaluation methods that use present values is ________. no interest rate an interest rate their ease of use None of these choices are correct. 3. Assume that...
TEXT VERSION: Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment...
TEXT VERSION:
Average Rate of Return Method, Net Present Value Method, and
Analysis
The capital investment committee of Ellis Transport and Storage
Inc. is considering two investment projects. The estimated income
from operations and net cash flows from each investment are as
follows:
Warehouse
Tracking Technology
Year
Income from
Operations
Net Cash
Flow
Income from
Operations
Net Cash
Flow
1
$47,500
$152,000
$100,000
$243,000
2
47,500
152,000
76,000
205,000
3
47,500
152,000
38,000
144,000
4
47,500
152,000
17,000
99,000
5...
Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of...
Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Warehouse Tracking Technology Year Income from Operations Net Cash Flow Income from Operations Net Cash Flow $53,200 $167,000 $267,000 53,200 167,000 225,000 $112,000 85,000 43,000 19,000 53,200 167,000 159,000 53,200 167,000 109,000 53,200 167,000 7,000 75,000 Total $266,000 $835,000...
Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of...
Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Cross Continent Trucking Inc. is considering two capital investments. The estimated income from operations and net cash flows from each investment are as follows: Warehouse Tracking Technology Year Income from Operations Net Cash Flow Income from Operations Net Cash Flow 1 $45,000 $146,000 $95,000 $234,000 2 45,000 146,000 72,000 197,000 3 45,000 146,000 36,000 139,000 4 45,000 146,000 16,000 95,000 5 45,000 146,000 6,000...
Use the information in the table below for the following 5 questions. A capital investment project is estimated to have the following after-tax cash flows, by year -$35,000 $13,000 $14.000 $15,000$16,000 The company utilizes a discount rate of 8% to evaluate capital projects. You may have rounding errors in your calculations so choose the closest answer. Assume cash flows are received equally over the year. 10) The NET PRESENT VALUE for the project shown above is: a) $13,789 b) $9,672...
Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Warehouse Tracking Technology Year Income from Operations Net Cash Flow Income from Operations Net Cash Flow $40,000 40,000 40,000 40,000 40,000 $200,000 $128,000 128,000 128,000 128,000 128,000 $640,000 $84,000 64,000 32,000 14,000 6,000 $200,000 $205,000 173,000 122,000 83,000 57,000...
answer
Comparison of Capital Budgeting Methods 1. Determine the payback period for an investment 2. Evaluate the acceptability of an investment project using the net present value method 3. Evaluate the acceptability of an investment project using the internal rate of return method. 4. Compute the simple rate of return for an investment FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW LEH Sign In в r u . B- 5- Number Formation 1 Format as Styles. Alignment Cells Editing...
Part Two Net Present Value Method Net present value (NPV) is one method that can be used to evaluate the financial viability of potential projects. It determines the present value of all future cash flows associated with potential projects and measures this against the cost of the project. To use net present value, a required rate of retum must be defined. The required rate of return is the minimum acceptable rate of return that an investment must yield for it...
Average rates of Return Method, Net Present Value Method, and And The capital investment committee of Ellis Transport and Storage Inc. is considering two The estimated income from operations and net cash flows from each investment are as follows: Tracking Technology Year Income from Net Cash $251.000 wNw Warehouse Income from Net Cash Operations Flow $52,200 $157,000 52,200 157,000 52,200 157,000 52,200 157,000 52,200 157,000 $261,000 $785,000 34,000 212.000 149.00 42,000 18,000 7.000 Total 61,000 $785,000 Each project requires an...
TEXT VERSION:
Average Rate of Return Method, Net Present Value Method, and
Analysis
The capital investment committee of Ellis Transport and Storage
Inc. is considering two investment projects. The estimated income
from operations and net cash flows from each investment are as
follows:
Warehouse
Tracking Technology
Year
Income from
Operations
Net Cash
Flow
Income from
Operations
Net Cash
Flow
1
$47,500
$152,000
$100,000
$243,000
2
47,500
152,000
76,000
205,000
3
47,500
152,000
38,000
144,000
4
47,500
152,000
17,000
99,000
5...
Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Warehouse Tracking Technology Year Income from Operations Net Cash Flow Income from Operations Net Cash Flow $53,200 $167,000 $267,000 53,200 167,000 225,000 $112,000 85,000 43,000 19,000 53,200 167,000 159,000 53,200 167,000 109,000 53,200 167,000 7,000 75,000 Total $266,000 $835,000...
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