Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate
=200,000[1-(1.1)^-9]/0.1
=200,000*5.759
=1151800
NPV=Present value of inflows-Present value of outflows
=1151800-804,000
=$347800
• ABC Corporation is considering an investment proposal that will require an initial outlay of $804,000...
Stellan Manufacturing is considering the following two investment proposals: Proposal X Proposal Y Investment $ 724 comma 000$724,000 $ 510 comma 000$510,000 Useful life 5 years 4 years Estimated annual net cash inflows received at the end of each year $ 158 comma 000$158,000 $ 106 comma 000$106,000 Residual value $ 66 comma 000$66,000 $0 Depreciation method Straightminus−line Straightminus−line Annual discount rate 10% 9% Present value of an ordinary annuity of $1: 8% 9% 10% 1 0.926 0.917 0.909 2...
Rocco Manufacturing is considering following two investment proposals: Proposal X Proposal Y Investment $740,000 $508,000 Useful life 5 years 4 years Estimated annual net cash inflows received at the end of each year $154,000 $92,000 Residual value $66,000 $0 Depreciation method Straight-line Straight-line Annual discount rate 10% 9% Compute the present value of the future cash inflows from Proposal X. Present value of an ordinary annuity of $1: 8% 9% 10% 1 0.926 0.917 0.909 2 1.783 1.759 1.736 3...
QUESTION 11 Present value of an Annuity of $1 in Arrears Periods 4% 6% 8% 10% 12% 14% 1 0.962 0.943 0.926 0.909 0.893 0.877 2 1.886 1.833 1.783 1.736 1.690 1.647 3 2.775 2.673 2.577 2.487 2.402 2.322 4 3.630 3.465 3.312 3.170 3.037 2.914 5 4.452 4.212 3.993 3.791 3.605 4.433 6 5.242 4.917 4.623 4.355 4.111 3.889 7 6.002 5.582 5.206 4.868 4.564 4.288 8 6.733 6.210 5.747 5.335 4.968 4.639 9 7.435 6.802 6.247 5.759...
The reason that a discount factor in Year 3 is less than a discount factor in Year 2 is that Question 34 options: Kenner Company is considering two projects. Project A Project B Initial investment $85,000 $24,000 Annual cash flows $20,676 $ 6,011 Life of the project 6 years 5 years Depreciation per year $14,167 $ 4,800 Present value of an Annuity of $1 in Arrears Periods 8% 10% 12% 14% 1 0.926 0.909 0.893 0.877 2 1.783...
X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $61,000 per year; operating costs with the new machine are expected to be $46,000 per year. The new machine will cost $69,000 and will last for five years, at which time it can be sold for $1,500. The current machine will also last for five more years but will not be worth anything at that time. It cost...
X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $65,000 per year; operating costs with the new machine are expected to be $47,000 per year. The new machine will cost $70,000 and will last for five years, at which time it can be sold for $1,500. The current machine will also last for five more years but will not be worth anything at that time. It cost...
On January 1, 2007, Phillips, Inc. leased a new machine from U.S. Leasing. The specific information on the lease is as follows: Lease inception Annual rental payment at December 31 of each year Economic life of the machine Market value of the machine Interest rate used by Phillips, Inc. End of 7 - year lease term January 1, 2007 $ 51,352 8 years $ 275,000 10% December 31, 2013 On January 1, 2007, Phillips, Inc. should record a lease liability...
Apologies that the sizes of the pictures are so odd. X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $64,000 per year; operating costs with the new machine are expected to be $45,000 per year. The new machine will cost $71,000 and will last for six years, at which time it can be sold for $1,000. The current machine will also last for six more years but...
X Company must replace one of its current machines with either Machine A or Machine B. The useful life of both machines is seven years. Machine A costs $51,000, and Machine B costs $59,000. Estimated annual cash flows with the two machines are as follows: Year Machine A Machine B 1 $-6,000 $-7,000 2 -8,000 -4,000 3 -8,000 -3,000 4 -8,000 -3,000 5 -6,000 -3,000 6 -5,000 -2,000 7 -4,000 -2,000 If X Company buys Machine B instead of Machine...
Period 3% 4% 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 5% 0.952 0.907 0.864 0.823 0.962 0.925 0.889 0.855 0.822 0.790 10.760 0.731 99 Present Value of $1.00 6% 7% 8% 0.943 0.890 0.840 0.792 0.917 0.842 0.772 0.784 0.935 0.873 0.816 0.763 0.713 0.666 0.623 0.582 0.582 0.747 0.705 0.665 0.746 0.926 0.857 0.794 0.735 0.681 0.630 | 0.583 0.540 11% 0.901 0.812 0.731 0.659 0.593 10.535 0.482 0.434 10.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 12%...