1. In above case Initial Investment of $2,50,000 is much higher than it's inflow over a next five years.
Following Table show Computation of Net Present Value assuming 10% Discount Factor, which is Negative ($1,36,980)
Year | Addl Cash Sales | Cost Savings | Annual Machine Maintainence Expense | Net Cash Flow | Assumption- Discounting Factor @ 10% | Present Value |
0 | ($250,000) | ($250,000) | 1.00 | (250,000) | ||
1 | $30,000 | $4,000 | $6,000 | $28,000 | 0.91 | 25,480 |
2 | $35,000 | $12,000 | $15,000 | $32,000 | 0.82 | 26,240 |
3 | $30,000 | $10,000 | $12,000 | $28,000 | 0.75 | 21,000 |
4 | $35,000 | $10,000 | $14,000 | $31,000 | 0.68 | 21,080 |
5 | $35,000 | $10,000 | $14,000 | $31,000 | 0.62 | 19,220 |
Net Present Value | ($100,000) | (136,980) |
2. Computation of Payback period is not possible, because Outflow is greater than Inflow.
3. Suggested to Management not to Buy this Equipemnt, because Inflow is lesser than Outflow.
Problem 3: A manufacturing equipment investment of $250,000 is expected to generate the following cash flows...
For the table, it's the annual machine maintenaince expense For Years 1 _ 2000 2_3000 3_3000 4_4000 5_4000 Thanks A manufacturing equipment investment of $150,000 is expected to generate the following cash flows over the next five years: Add'l Yr Cost Annua Cash Saving machin mainter Expense $2,000 Sales $30,000 $5,000 1 40,000 5,000 2 3,000 3 40,000 8,000 3,000 4,000 4,000 4 50,000 10,000 5 50,000 10,000 Required: A. Draw a cash flow timeline for the proposal. B. Compute...
92: An investment of $200,000 is expected to generate the following WW,000 is expected to generate the following cash inflows in six years: Year 1: $70,000 Year 2: $60,000 Year 3: $55,000 Year 4: $40,000 Year 5: $30,000 Year 6: $25,000 Required: Compute payback period of the investment. Should the investment be made if management wants to recover the initial investment in 3 years or less?(25 marks)
Calculate the conventional payback period for the following cash flows. Investment = $250,000 Salvage Value = 0 Service Life = 6 years n Cash flow 0 -250,000 1 75,000 2 55,000 3 65,000 4 25,000 5 35,000 6 20,000
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Assume a $100,000 investment and the following cash flows for two alternatives. Year л во мн Investment X $30,000 35,000 25,000 20,000 15,000 Investment Y $50,000 40,000 30,000 a. Calculate the payback for investment X and Y. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Investment X years years Investment Y b. Which alternative would you select under the payback method? Investment X Investment Y
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Given the following four projects and their cash flows, calculate the discounted payback period with a 5% discount rate discount rate. Cash Flow A B C D Cost $ 10,000 $ 25,000 $ 45,000 $ 100,000 Cash flow year 1 $ 4,000 $ 2,000 $ 10,000 $ 40,000 Cash flow year 2 $ 4,000 $ 8,000 $ 15,000 $ 30,000 Cash flow year 3 $ 4,000 $ 14,000 $ 20,000 $ 20,000 Cash flow year 4 $ 4,000 $ 20,000...