Homework Answers
Project X:
| Year | CF | Discount Factor | Discounted CF | ||
| 0 | $-18,000.00 | 1/(1+0.13)^0= | 1 | 1*-18000= | $ -18,000.00 |
| 1 | $ 9,000.00 | 1/(1+0.13)^1= | 0.884955752 | 0.884955752212389*9000= | $ 7,964.60 |
| 2 | $ 7,000.00 | 1/(1+0.13)^2= | 0.783146683 | 0.783146683373796*7000= | $ 5,482.03 |
| 3 | $ 8,000.00 | 1/(1+0.13)^3= | 0.693050162 | 0.693050162277696*8000= | $ 5,544.40 |
| 4 | $ 7,000.00 | 1/(1+0.13)^4= | 0.613318728 | 0.613318727679377*7000= | $ 4,293.23 |
| NPV = Sum of all Discounted CF | $ 5,284.26 | ||||
| Profitability index | 1.29 | ||||
In the financial calculator, we will input:
And then calculate the NPV at the 13% discount rate, after which we will calculate the PI using the formula explained above
Project Y:
| Year | CF | Discount Factor | Discounted CF | ||
| 0 | $-38,000.00 | 1/(1+0.13)^0= | 1 | 1*-38000= | $ -38,000.00 |
| 1 | $ 19,000.00 | 1/(1+0.13)^1= | 0.884955752 | 0.884955752212389*19000= | $ 16,814.16 |
| 2 | $ 12,000.00 | 1/(1+0.13)^2= | 0.783146683 | 0.783146683373796*12000= | $ 9,397.76 |
| 3 | $ 13,000.00 | 1/(1+0.13)^3= | 0.693050162 | 0.693050162277696*13000= | $ 9,009.65 |
| 4 | $ 15,000.00 | 1/(1+0.13)^4= | 0.613318728 | 0.613318727679377*15000= | $ 9,199.78 |
| NPV = Sum of all Discounted CF | $ 6,421.35 | ||||
| Profitability index | 1.17 | ||||
In the financial calculator, we will input:
And then calculate the NPV at the 13% discount rate, after which we will calculate the PI using the formula explained above
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You are asked to evaluate the following two projects for the Norton corporation. Use a discount...
You are asked to evaluate the following two projects for the Norton corporation. Use a discount...
You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 12 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Protect X (Videotapes of the Weather Report) ($ 36,000 Investment) Year Cash Flow $18,000 16,000 17,000 16,600 Project Y (Slow-Motion Replays of Commercials) ($56.000 Investment) Year Cash Flow $ 28,000 21.000 22.000 24,000 a. Calculate the profitability index for project X....
1 Appendix B Present value of $1. PVF PV=FV Percent Period 1% 5% 8% 9% 12%...
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1 Appendix B Present value of $1. PVF PV=FV Percent Period 1% 5% 8% 9% 12%...
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Keller Construction is considering two new investments. Project E calls for the purchase of earthmoving equipment....
Keller Construction is
considering two new investments. Project E calls for the purchase
of earthmoving equipment. Project H represents an investment in a
hydraulic lift. Keller wishes to use a net present value profile in
comparing the projects. The investment and cash flow patterns are
as follows: Use Appendix B for an approximate answer but calculate
your final answer using the formula and financial calculator
methods.
Project E
Project H
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($36,000 Investment)
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1 Appendix B Present value of $1. PVF PV=FV Percent Period 1% 5% 8% 9% 12%...
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X-treme Vitamin Company is considering two investments, both of which cost $20,000. The cash flows are...
X-treme Vitamin Company is considering two investments, both of which cost $20,000. The cash flows are as follows: Year Project A Project B $23,000 $20,000 2 10,000 9,000 3 10,000 15,000 1 Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a-1. Calculate the payback period for Project A and Project B. (Round your answers to 2 decimal places.) Project A Project B Payback Period year(s) year(s) b-1. Calculate the...
PLEASE ANSWER 1-4b. AND EXPLAIN ANSWERS. THIS IS SECOND TIME I ASKED QUESTION PLEASE ONLY ANSWER...
PLEASE ANSWER 1-4b. AND EXPLAIN ANSWERS.
THIS IS SECOND TIME I ASKED QUESTION PLEASE ONLY ANSWER IF YOU ARE
SURE YOU ARE CORRECT.
EXHIBITS BELOW:
Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his division's return on investment (ROI), which has been above 22% each of the last three years. Casey is considering a capital budgeting project that would require a $3,800,000 investment in equipment with a useful life of five...
You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 12 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Protect X (Videotapes of the Weather Report) ($ 36,000 Investment) Year Cash Flow $18,000 16,000 17,000 16,600 Project Y (Slow-Motion Replays of Commercials) ($56.000 Investment) Year Cash Flow $ 28,000 21.000 22.000 24,000 a. Calculate the profitability index for project X....
1 Appendix B Present value of $1. PVF PV=FV Percent Period 1% 5% 8% 9% 12% 1 2. 3 0.893 0.797 012 4 6 7 8 9 10 .............. 11 12 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0.905 0.896 0.887 0.879 0.870 0.861 0.853 0.844 0.836 0.828 0.820 0.780 0.742 0.672 0.608 2% 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0.728 0.714 0.700 0.686 0.673 0.610 0.552 0.453 0.372...
1 Appendix B Present value of $1. PVF PV=FV Percent Period 1% 5% 8% 9% 12% 1 2. 3 0.893 0.797 012 4 6 7 8 9 10 .............. 11 12 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0.905 0.896 0.887 0.879 0.870 0.861 0.853 0.844 0.836 0.828 0.820 0.780 0.742 0.672 0.608 2% 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0.728 0.714 0.700 0.686 0.673 0.610 0.552 0.453 0.372...
Keller Construction is
considering two new investments. Project E calls for the purchase
of earthmoving equipment. Project H represents an investment in a
hydraulic lift. Keller wishes to use a net present value profile in
comparing the projects. The investment and cash flow patterns are
as follows: Use Appendix B for an approximate answer but calculate
your final answer using the formula and financial calculator
methods.
Project E
Project H
($40,000 Investment)
($36,000 Investment)
Year
Cash Flow
Year
Cash Flow...
1 Appendix B Present value of $1. PVF PV=FV Percent Period 1% 5% 8% 9% 12% 1 2. 3 0.893 0.797 012 4 6 7 8 9 10 .............. 11 12 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0.905 0.896 0.887 0.879 0.870 0.861 0.853 0.844 0.836 0.828 0.820 0.780 0.742 0.672 0.608 2% 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0.728 0.714 0.700 0.686 0.673 0.610 0.552 0.453 0.372...
Cascade Mining Company expects its earnings and dividends to
increase by 8 percent per year over the next 6 years and then to
remain relatively constant thereafter. The firm currently (that is,
as of year 0) pays a dividend of $4.5 per share. Determine the
value of a share of Cascade stock to an investor with a 11 percent
required rate of return. Use Table II to answer the question. Round
your answer to the nearest cent.
TABLE II Present...
Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of two new products for a five- year period. His annual pay raises are determined by his division's return on investment (ROI), which has exceeded 22% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product A Product B $ 370,000 $ 570,000 Initial investment: Cost of equipment (zero salvage value) Annual revenues and...
X-treme Vitamin Company is considering two investments, both of which cost $20,000. The cash flows are as follows: Year Project A Project B $23,000 $20,000 2 10,000 9,000 3 10,000 15,000 1 Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a-1. Calculate the payback period for Project A and Project B. (Round your answers to 2 decimal places.) Project A Project B Payback Period year(s) year(s) b-1. Calculate the...
PLEASE ANSWER 1-4b. AND EXPLAIN ANSWERS.
THIS IS SECOND TIME I ASKED QUESTION PLEASE ONLY ANSWER IF YOU ARE
SURE YOU ARE CORRECT.
EXHIBITS BELOW:
Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his division's return on investment (ROI), which has been above 22% each of the last three years. Casey is considering a capital budgeting project that would require a $3,800,000 investment in equipment with a useful life of five...
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