A company that makes clutch disks had the cash flows shown below for one department with...
A company that makes clutch disks had the cash flows shown below
for one department with a MARR of 25%. Calculate (a) the internal
rate of return (Hint: 20%<=i*<=22%) and (b) the composite
rate of return (Hint: 18%<=i’<=20%), using a reinvestment
rate of 20% per year. Should the company continue to make clutch
disks?
Year Cash flow, $
0 6000
1 -10000
2 12000
3 -10400
Homework Answers
The given data is executed in an excel:
a)
The IRR is 20.23% and
b)
The Composite rate of return is 19.95%
The company should not continue to make clutch disk as the IRR is Less than the given MARR of 25%
The excel formula and calculation used are shown below:
Please don't forget to rate the answer if its helpful,
thank you.
Add Answer to:
A company that makes clutch disks had the cash flows shown below
for one department with...
3. An investment opportunity has the cash flows which are given below. Years Cash Flow 15000...
3. An investment opportunity has the cash flows which are given below. Years Cash Flow 15000 +12000 +6000 8000 +4000 +12000 2 Use Descartes and Norstrom rules to define the characteristic of internal rate of return for this investment. (10 points) a. According to Descartes rules: According to Norstrom criteria: b. Find external rate of return of the investment opportunity if the external investment rate is %10. (15 points)
Given the net cash flows for the mutually exclusive projects A and B shown in the table below and a MARR of 12%. n Pr...
Given the net cash flows for the mutually exclusive projects A and B shown in the table below and a MARR of 12%. n Project A Project B 0 -$25000 -$25000 1 $2000 $10000 2 $6000 $10000 3 $12000 $10000 4 $24000 $10000 5 $28000 $10000 NPW AE a) Solve for the NPW and AE for each project and fill in the respective boxes. b) Which project would you select?
For the cash flows shown below, determine the equivalent Annual value for all six years. Note:...
For the cash flows shown below, determine the equivalent Annual value for all six years. Note: Consider at least three digits in your calculations, and answers 18.302. Year 2 3 5 6 Net Profit 9000 10000 10000 10000 10000 12000 Annual Rate 20 4 4 TO 4 Answer
A capital budgeting project has the following cash flows: Year Cash Flow 0 ($100) 1 $20 2...
A capital budgeting project has the following cash flows: Year Cash Flow 0 ($100) 1 $20 2 $40 3 $60 Assume that the firm's reinvestment rate and the cost of capital are both 10% What is the Modified Internal rate of Return of the project? a 11.28% b 8.63% c 10% d 7.79%
4(a) Expected cash flows for a strip-mining project are estimated as shown below. 7 8 End...
4(a) Expected cash flows for a strip-mining project are estimated as shown below. 7 8 End of 0 year Cash -100,000 flow 20,000 100.000 100.000 50,000 50,000 50,000 50,000 -350,000 A startup cost is incurred immediately. The income exceeds outlays for the next 7 years. During the 8th year, the major cost is for landscape improvement. Does the strip mining project appear to be a profitable investment? On the basis of past experience, the mining company wishes to use MARR...
1.) An investment in manufacturing equipment yields the following cash flows for 8 years. At the...
1.) An investment in manufacturing equipment yields the following cash flows for 8 years. At the end of the 8th year the equipment can be sold for $15,000. Assuming an interest rate of 14% (compounded annually), how much would you be willing to invest in this manufacturing equipment? C=? I=2000 I=2000 I=2000 I=2000 I=1000 I=1000 I=1000 I=1000 L=$15,000 0 1 2 3 4 5 6 7 8 C: Cost, I: Income, L: Salvage Value 2.) Suppose that the nominal annual...
14. Consider four projects with the following sequences of cash flows: n 0 NET CASH FLOWS...
14. Consider four projects with the following sequences of cash flows: n 0 NET CASH FLOWS A B C -$25,000|-$23,000-$56,500 $12,000 $32,000 -$2,500 $23,000 $32,000-$6,459 $34,000 $25,000 $88,345 3 (a) Identify all the simple investments. (b) Identify all the non-simple investments. (c) Compute the Internal Rate of Return (IRR) for each project using NPV method and Excel. Note the following: A simple (or conventional) investment is simply when one sign change occurs in the net cash flow series. If the...
s. Understanding the NPV profile Aa Aa If an independent project with conventional, or normal, cash flows is being...
s. Understanding the NPV profile Aa Aa If an independent project with conventional, or normal, cash flows is being analyzed, the net present value (NPV) and internal rate of return (IRR) methods agree. Projects W and X are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows. NPV (Dollars) Year Project W Project x 800 0 - $1,500 -$1,000 $200 $350 600 Project X 2 $350 $500 $400 $600 400 4 $600 $750 Project W 200...
An internet company projects the following cash flows shown in the table below (in milions). Usin...
include cash flow diagram
An internet company projects the following cash flows shown in the table below (in milions). Using a Net Present Worth Balancing Equation and a manual iteration process compute the Rate of Return. Cash Flow (millions) 40 Year 0 1-3 4 -28 +15 +30 6-10
An internet company projects the following cash flows shown in the table below (in milions). Using a Net Present Worth Balancing Equation and a manual iteration process compute the Rate of Return....
A project has the following cash flows: Year 0: -$130,000 Year 1: $60,000 &nbs
A project has the following cash flows: Year 0: -$130,000 Year 1: $60,000 Year 2: $0 Year 3: $100,000 Year 4: $0 Year 5: $60,000 The discount rate is 18%. Calculate the internal rate of return (IRR). 17-18% 18-19% 20-21% 21-22% None of the above.
3. An investment opportunity has the cash flows which are given below. Years Cash Flow 15000 +12000 +6000 8000 +4000 +12000 2 Use Descartes and Norstrom rules to define the characteristic of internal rate of return for this investment. (10 points) a. According to Descartes rules: According to Norstrom criteria: b. Find external rate of return of the investment opportunity if the external investment rate is %10. (15 points)
For the cash flows shown below, determine the equivalent Annual value for all six years. Note: Consider at least three digits in your calculations, and answers 18.302. Year 2 3 5 6 Net Profit 9000 10000 10000 10000 10000 12000 Annual Rate 20 4 4 TO 4 Answer
4(a) Expected cash flows for a strip-mining project are estimated as shown below. 7 8 End of 0 year Cash -100,000 flow 20,000 100.000 100.000 50,000 50,000 50,000 50,000 -350,000 A startup cost is incurred immediately. The income exceeds outlays for the next 7 years. During the 8th year, the major cost is for landscape improvement. Does the strip mining project appear to be a profitable investment? On the basis of past experience, the mining company wishes to use MARR...
14. Consider four projects with the following sequences of cash flows: n 0 NET CASH FLOWS A B C -$25,000|-$23,000-$56,500 $12,000 $32,000 -$2,500 $23,000 $32,000-$6,459 $34,000 $25,000 $88,345 3 (a) Identify all the simple investments. (b) Identify all the non-simple investments. (c) Compute the Internal Rate of Return (IRR) for each project using NPV method and Excel. Note the following: A simple (or conventional) investment is simply when one sign change occurs in the net cash flow series. If the...
s. Understanding the NPV profile Aa Aa If an independent project with conventional, or normal, cash flows is being analyzed, the net present value (NPV) and internal rate of return (IRR) methods agree. Projects W and X are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows. NPV (Dollars) Year Project W Project x 800 0 - $1,500 -$1,000 $200 $350 600 Project X 2 $350 $500 $400 $600 400 4 $600 $750 Project W 200...
include cash flow diagram
An internet company projects the following cash flows shown in the table below (in milions). Using a Net Present Worth Balancing Equation and a manual iteration process compute the Rate of Return. Cash Flow (millions) 40 Year 0 1-3 4 -28 +15 +30 6-10
An internet company projects the following cash flows shown in the table below (in milions). Using a Net Present Worth Balancing Equation and a manual iteration process compute the Rate of Return....
Most questions answered within 3 hours.
-
A metal strip 8.80 cm long, 0.758 cm wide, and 0.594 mm thick
moves with constant...
asked 4 minutes ago -
The following 32-bit binary word written in hexadecimal format
represents a single RISC-V assembly instruction. What...
asked 8 minutes ago -
A
survey found that out of a random sample of 200 workers 168 said
that they...
asked 19 minutes ago -
Duck Dodgers hops in his spaceship and leaves the Earth at a
constant velocity of 0.6c...
asked 21 minutes ago -
Describe three
key HR functions that must be integrated into the performance
management system to support...
asked 29 minutes ago -
What is the incident wavelength in meters in IR instrument?
asked 45 minutes ago -
Jersey Computer Company has estimated the costs of debt and
equity capital (with bankruptcy and agency...
asked 52 minutes ago -
Water drips from the nozzle of a shower onto the floor 190 cm
below. The drops...
asked 57 minutes ago -
Banks creation of Money: Myths or Reality?
asked 1 hour ago -
An average is an attempt to summarize a collection of data into
just one number. Discuss...
asked 1 hour ago -
explain in details 250words please
The Effects of the Age Discrimination in Employment Act
(1967)
asked 1 hour ago -
x1 = 1, y1 = 2
x2 = 2, y2 = 3
x3 = 3, y3...
asked 1 hour ago