ZuoTi.Pro
Question

Assume that you are the senior economist of Monsanto. The company is considering an investment for...

  1. Assume that you are the senior economist of Monsanto. The company is considering an investment for a new sophisticated inventory control system. At this point the company is between options A and B. Assume that the discount rate for both projects is 12%. Also assume that you know the following information:

What is the Net Present Value for project A (use 2 decimal places)?

Expected Net Cash Flow

Year

Project A

Project B

0

- $10,000

- $10,000

1

6,500

3,500

2

3,000

3,500

3

3,000

3,500

4

1,000

3,500
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=6500/1.12+3000/1.12^2+3000/1.12^3+1000/1.12^4

=10966.01

NPV=Present value of inflows-Present value of outflows

=10966.01-10,000

=$966.01(Approx).

0 0
Add a comment
Know the answer?
Add Answer to:
Assume that you are the senior economist of Monsanto. The company is considering an investment for...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Decision rule Conflict. Bob Sponge has been retained as a management consultant by Square Pants, Inc.,...

    Decision rule Conflict. Bob Sponge has been retained as a management consultant by Square Pants, Inc., a local specialty retailer to analyze two proposed capital investment projects, projects X and Y. Project X is a sophisticated working capital and inventory control system based upon a powerful personal computer, called a system server and PC software specifically designed for inventory processing and control in the retailing business. Project Y is a similarly sophisticated working capital and inventory control system based upon...

  • You are a financial analyst for the Brittle Company. The director of capital budgeting has asked...

    You are a financial analyst for the Brittle Company. The director of capital budgeting has asked you to analyze two proposed capital investments: Projects X and Y. Each project has a cost of $10,000, and the cost of capital for each is 12%. The projects' expected net cash flows are shown in the table below. Expected Net Cash Flows Year Project X Project Y 0 – $10,000 – $10,000 1 6,500 3,500 2 3,000 3,500 3 3,000 3,500 4 1,000...

  • draw time line for answer a 9.6 Assume that you are the chief financial officer at...

    draw time line for answer a 9.6 Assume that you are the chief financial officer at Porter Memorial Hospital. The CEO has asked you to analyze two proposed capital investments - project X and project Y. Each project requires a net investment outlay of $10,000, and the opportunity cost of capital for each project is 12 percent. The projects' expected net cash flows are as follows: Year Project X ($) (10,000) 6,500 3,000 3,000 1,000 Project Y ($) (10,000) 3,000...

  • draw time line for answer a Assume that you are the chief financial officer at Porter...

    draw time line for answer a Assume that you are the chief financial officer at Porter Memorial Hospital. The CEO has asked you to analyze two proposed capital investments-project X and project Y. Each project requires a net investment outlay of $10,000, and the opportunity cost of capital for each project is 12 percent. The projects' expected net cash flows are as follows: 9.6 Project X (S) (10,000) Year Project Y ($) (10,000) 6,500 1 3,000 3,000 3,000 3,000 3,000...

  • Please show all work & calculations. Assume that you are the chief financial officer at Porter...

    Please show all work & calculations. Assume that you are the chief financial officer at Porter Memorial Hospital. The CEO has asked you to analyze two proposed capital investments - Project X and Project Y. Each project requires a net investment outlay of $10,000, and the cost of capital for each project is 12 percent. The project's expected net cash flows are as follows: Year 0 1 Project X ($10,000) $6,500 $3,000 $3,000 $1,000 Project Y ($10,000) $3,000 $3,000 $3,000...

  • please solve and explain how to find IRR Only. and draw the time line for this problem! thanks! 9.6 Assume that you...

    please solve and explain how to find IRR Only. and draw the time line for this problem! thanks! 9.6 Assume that you are the chief financial officer at Porter Memorial Hospital. The CEO has asked you to analyze two proposed capital investments-project X and project Y. Each project requires a net investment outlay of $10,000, and the opportunity cost of capital for each project is 12 percent. The projects' expected net cash flows are as follows: Year Project X ($)...

  • Table Tools References Mailings Review View Help Design Layout Tell me Problem 3 Assume that you...

    Table Tools References Mailings Review View Help Design Layout Tell me Problem 3 Assume that you are the CFO at Porter Memorial Hospital The CEO has asked you to analyze two proposed capital investments: Project X and Project Y. Each project requires a net investment outay of $10,000, and the cost of capital for each project is 12 percent The projects expected net cash flows are as follows: Pr t Y Year Project X $10,000 $3,000 $1,000 $10,000 $3,000 $3,000...

  • Keller Construction is considering two new investments

    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 EProject H($19,000 Investment)($19,000 Investment)YearCash FlowYearCash Flow1$4,0001$15,00025,00024,00036,00033,000413,000a. Determine the net present value of the projects based on a...

  • QUESTION THREE A. A company is considering two alternative investment projects both of which have a...

    QUESTION THREE A. A company is considering two alternative investment projects both of which have a positive net present value. The projects have been ranked on the basis of both net present value (NPV) and internal rate of return (IRR). The result of the ranking is shown below: Project A Project B NPV Ist 2nd IRR 2nd 1st Discuss any four (4) potential reasons why the conflict between the NPV and IRR ranking may have arisen. (12 marks) B. Kumi...

  • 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 H ($27,000 Investment) Project E ($32,000 Investment) Cash Flow Cash Flow Year Year...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT