Homework Answers
ANSWER:
The correct answer is option b that is 6 as the lcm of 3 and 6 is 6. (indifferent lives calculation is done based on lcm when pw is calculated.)
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Project X has life 3 years, project Y has life 6 years. In comparing the projects...
Future Limited has the option to invest in Project X and Project Y but finance is...
Future Limited has the option to invest in Project X and Project Y but finance is only available to invest in one of them. You are given the following projected data: Project X Project Y Investment R900 000 R600 000 Depreciation method Straight-line Straight-line Cost of capital 14% 14% Economic life span 5 years 5 years Residual value at end of term R84 000 Nil Net profit: Year 1 56 000 70 000 Year 2 80 000 70 000 Year...
PA11-3 Comparing, Prioritizing Multiple Projects [LO 11-1, 11-2, 11-3, 11-6] Hearne Company has a number of...
PA11-3 Comparing, Prioritizing Multiple Projects [LO 11-1, 11-2, 11-3, 11-6] Hearne Company has a number of potential capital investments. Because these projects vary in nature, initial investment, and time horizon, management is finding it difficult to compare them. Assume straight line depreciation method is used. Project 1: Retooling Manufacturing Facility This project would require an initial investment of $5,450,000. It would generate $973,000 in additional net cash flow each year. The new machinery has a useful life of eight years...
PA11-3 (Algo) Comparing, Prioritizing Multiple Projects [LO 11-1, 11-2, 11-3, 11-6] Hearne Company has a number...
PA11-3 (Algo) Comparing, Prioritizing Multiple Projects [LO 11-1, 11-2, 11-3, 11-6] Hearne Company has a number of potential capital Investments. Because these projects vary in nature, initial investment, and time horizon, management is finding it difficult to compare them. Assume straight line depreciation method is used. (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1) (Use appropriate factor(s) from the tables provided.) Proiect 1: Retooling Manufacturing Facility This project would require...
PA11-3 Comparing, Prioritizing Multiple Projects [LO 11-1, 11-2, 11-3, 11-6] Hearne Company has a number of...
PA11-3 Comparing, Prioritizing Multiple Projects [LO 11-1, 11-2, 11-3, 11-6] Hearne Company has a number of potential capital investments. Because these projects vary in nature, initial investment, and time horizon, management is finding it difficult to compare them. Assume straight line depreciation method is used. Project 1: Retooling Manufacturing Facility This project would require an initial investment of $4,900,000. It would generate $874,000 in additional net cash flow each year. The new machinery has a useful life of eight years...
EXERCISE 7-14 Comparison of Projects Using Net Present Value L07-2 Labeau Products, Ltd., of Perth, Australia,...
EXERCISE 7-14 Comparison of Projects Using Net Present Value L07-2 Labeau Products, Ltd., of Perth, Australia, has $35,000 to invest. The company is trying to decide between two alternative uses for the funds as follows: Invest in Project X Invest in Project Y $35,000 $35,000 $12.000 Investment required Annual cash inflows ..... Single cash inflow at the end of 6 years. Life of the project. $90,000 6 years 6 years The company's discount rate is 18%. Required: 1. Compute the...
E11-8 Comparing Projects Using Profitability Index [LO 11-6] Shaylee Corp has $2.30 million to invest in...
E11-8 Comparing Projects Using Profitability Index [LO 11-6] Shaylee Corp has $2.30 million to invest in new projects. The company's managers have presented a number of possible options that the board must prioritize. Information about the projects follows: Initial investment Present value of future cash flows Project A Project B $ 650,000 $ 330,000 $ 865,000 465,000 Project C 890,000 1,300,000 Project D $ 1,045,000 1,660,000 Required: 1. Is Shaylee able to invest in all of these projects simultaneously? No...
Garcia and Sons has a required payback period of five years for all of its projects....
Garcia and Sons has a required payback period of five years for all of its projects. The company is comparing two independent projects. Project Aracena has an expected payback period of 3.6 years and a net present value of $465,800. Project Bilbao has an expected payback period of 4.1 years with a net present value of -$400. Which projects should be accepted based on the payback decision rule? 1. either, but not both projects 2. Both Arcena and Bilbao 3....
Most Company has an opportunity to invest in one of two new projects. Project Y requires a $320,000 investment for new...
Most Company has an opportunity to invest in one of two new projects. Project Y requires a $320,000 investment for new machinery with a five-year life and no salvage value. Project Z requires a $320,000 investment for new machinery with a four-year life and no salvage value. The two projects yield the following predicted annual results. The company uses straight-line depreciation, and cash flows occur evenly throughout each year. (PV of $1, FV of $1, PVA of $1, and FVA...
Question 2 Year DKW Inc., has two projects offering Project X and Project Y. They are...
Question 2 Year DKW Inc., has two projects offering Project X and Project Y. They are mutually exclusive, and both require $350,000 for investment. The cost of capital is 10%. The following table are expected cash flow Project X ($) Project Y ($) 90,000 180,000 90,000 120,000 90,000 60000 90,000 50,000 90,000 50,000 90,000 2.1 Calculate Project X's the internal rate of return (IRR). Use formula of Time Value of Money to illustrate 23 Calculate payback period of both projects,...
Most Company has an opportunity to invest in one of two new projects. Project Y requires...
Most Company has an opportunity to invest in one of two new projects. Project Y requires a $340,000 investment for new machinery with a five-year life and no salvage value. Project Z requires a $340,000 investment for new machinery with a four-year life and no salvage value. The two projects yield the following predicted annual results. The company uses straight-line depreciation, and cash flows occur evenly throughout each year. (PV of $1. FV of $1. PVA of $1, and EVA...
PA11-3 Comparing, Prioritizing Multiple Projects [LO 11-1, 11-2, 11-3, 11-6] Hearne Company has a number of potential capital investments. Because these projects vary in nature, initial investment, and time horizon, management is finding it difficult to compare them. Assume straight line depreciation method is used. Project 1: Retooling Manufacturing Facility This project would require an initial investment of $5,450,000. It would generate $973,000 in additional net cash flow each year. The new machinery has a useful life of eight years...
PA11-3 (Algo) Comparing, Prioritizing Multiple Projects [LO 11-1, 11-2, 11-3, 11-6] Hearne Company has a number of potential capital Investments. Because these projects vary in nature, initial investment, and time horizon, management is finding it difficult to compare them. Assume straight line depreciation method is used. (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1) (Use appropriate factor(s) from the tables provided.) Proiect 1: Retooling Manufacturing Facility This project would require...
EXERCISE 7-14 Comparison of Projects Using Net Present Value L07-2 Labeau Products, Ltd., of Perth, Australia, has $35,000 to invest. The company is trying to decide between two alternative uses for the funds as follows: Invest in Project X Invest in Project Y $35,000 $35,000 $12.000 Investment required Annual cash inflows ..... Single cash inflow at the end of 6 years. Life of the project. $90,000 6 years 6 years The company's discount rate is 18%. Required: 1. Compute the...
E11-8 Comparing Projects Using Profitability Index [LO 11-6] Shaylee Corp has $2.30 million to invest in new projects. The company's managers have presented a number of possible options that the board must prioritize. Information about the projects follows: Initial investment Present value of future cash flows Project A Project B $ 650,000 $ 330,000 $ 865,000 465,000 Project C 890,000 1,300,000 Project D $ 1,045,000 1,660,000 Required: 1. Is Shaylee able to invest in all of these projects simultaneously? No...
Most Company has an opportunity to invest in one of two new projects. Project Y requires a $320,000 investment for new machinery with a five-year life and no salvage value. Project Z requires a $320,000 investment for new machinery with a four-year life and no salvage value. The two projects yield the following predicted annual results. The company uses straight-line depreciation, and cash flows occur evenly throughout each year. (PV of $1, FV of $1, PVA of $1, and FVA...
Question 2 Year DKW Inc., has two projects offering Project X and Project Y. They are mutually exclusive, and both require $350,000 for investment. The cost of capital is 10%. The following table are expected cash flow Project X ($) Project Y ($) 90,000 180,000 90,000 120,000 90,000 60000 90,000 50,000 90,000 50,000 90,000 2.1 Calculate Project X's the internal rate of return (IRR). Use formula of Time Value of Money to illustrate 23 Calculate payback period of both projects,...
Most Company has an opportunity to invest in one of two new projects. Project Y requires a $340,000 investment for new machinery with a five-year life and no salvage value. Project Z requires a $340,000 investment for new machinery with a four-year life and no salvage value. The two projects yield the following predicted annual results. The company uses straight-line depreciation, and cash flows occur evenly throughout each year. (PV of $1. FV of $1. PVA of $1, and EVA...
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