ZuoTi.Pro
Question

Triangle PLC is a manufacturer of computer components and a decision is required on a proposal...

  1. Triangle PLC is a manufacturer of computer components and a decision is required on a proposal to invest $1,800,000 on a new machine in order to move into a new market for components. The financial details are as follows:

Initial Investment

$1,800,000

Life of project

10 years

Net cash flows:

Years 1–6

$500,000 per year

Years 7–10

$300,000 per year

Residual value

$500,000

  1. Calculate the payback period.
  2. Calculate the project’s net present value.
  3. Advise the company on whether it should proceed with the project and provide reasons for your advice.
business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

3d mois en cool Initial Cash Queflow - $ 1800000 life of Project = 10 years. Cashirflow Cumulatine Cash inflow Sooooo Sooooo© Assuming Cost of capital clo year. Cash in flow Present Value Cash isflow Sooooo 500000 = 454545 (1.0) Sooooo Sooooo = 413

PLEASE GIVE YOUR VALUABLE REVIEWS ABOUT THE ANSWER IN THE COMMENT BOX AND YOU CAN LSO GIVE THUMBS UP IF YOU LIKE THE ANSWER.

THANK YOU

0 0
Add a comment
Know the answer?
Add Answer to:
Triangle PLC is a manufacturer of computer components and a decision is required on a proposal...
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

  • BAF 2104: FINANCIAL MANAGEMENT 1 CAT QUESTION ONE A company is considering an investment proposal to...

    BAF 2104: FINANCIAL MANAGEMENT 1 CAT QUESTION ONE A company is considering an investment proposal to install new milling controls. The project will cost Kes50,000,000. The facility has a life expectancy of five years and no salvage value. The company’s tax rate is 40%. The estimated cash flows from the proposed investment proposal are as follows: Year                            CF Kes 000 1                                  13,000 2                                  14,000 3                                  18,000 4                                  23,000 5                                  25,000 Compute: Accounting Rate of Return                                                                       Discounted payback period at 6%...

  • You are asked to analyze the following proposal to purchase a new machine and are given...

    You are asked to analyze the following proposal to purchase a new machine and are given the annual cash flows associated with it: purchase price $500,000 the net operating cash flows after tax are estimated to be $100,000 per year for each of the ten years the cost of capital is 10% a. Calculate the internal rate of return on this project. b. What is the net present value for the project? c. Calculate the payback period. d. Answer the...

  • Williams Corp is a manufacturer that is considering adding a new product line - either tillers...

    Williams Corp is a manufacturer that is considering adding a new product line - either tillers for tractors (Proposal A) or trailers for trucks (Proposal B). To do so, it will need to invest in new equipment. Williams Corp. has gathered the following information about each proposal: Proposal A's equipment will cost $8,740,000 and is expected to result in annual net cash inflows of $1,505,000 over nine years, with zero residual value at the end of nine years. Proposal B's...

  • What information does the payback period provide? Suppose you are evaluating a project with the expected...

    What information does the payback period provide? Suppose you are evaluating a project with the expected future cash inflows shown in the following table. Your boss has asked you to calculate the project’s net present value (NPV). You don’t know the project’s initial cost, but you do know the project’s regular, or conventional, payback period is 2.50 years. Year Cash Flow Year 1 $300,000 Year 2 $425,000 Year 3 $450,000 Year 4 $500,000 If the project’s weighted average cost of...

  • Triangle Corp is planning to buy a new computer for $750,000 with a useful life of...

    Triangle Corp is planning to buy a new computer for $750,000 with a useful life of six years. At the end of six years, the system will have no value. Over the six years the system will save them $250,000 each year for the first three years and $100,000 each year for the last three years. a. What is the NPV of the project if Triangle Corp requires a return of 15%? b. What is the IRR for this project?...

  • 3. Consider the information in Table 2. Sports Bulletin Plc. is considering investing in two projects,...

    3. Consider the information in Table 2. Sports Bulletin Plc. is considering investing in two projects, A and B. The initial outlay and annual cash flows are shown in Table 2. Straight-line depreciation method is used. The minimum accounting rate of return is 15%. The discount rate is 10%, and the depreciation rate is 25%. The minimum acceptable pavback period is 3 vears. For each project, the change in net working capital is zero in each vear, Both proiects are...

  • QUESTION MKV Plc is a manufacturing company based in Central Province part of Zambia. The company...

    QUESTION MKV Plc is a manufacturing company based in Central Province part of Zambia. The company is evaluating an investment proposal to manufacture special product called ‘HUA’, which has performed well in test marketing trials conducted. MKV spent K20,000 on test marketing trails.The following information relating to this investment proposal has now been prepared. Initial investment                                                       K2 million Selling price (current price terms)                            K20 per unit Expected selling price inflation                                 3% per year Variable operating...

  • A manufacturing business is considering investing in some new equipment. The management accountant has estimated the...

    A manufacturing business is considering investing in some new equipment. The management accountant has estimated the future net cash flows from the investment as follows. Initial investment (£1,360,000) Year 1 £470,000 Year 2 £580,000 Year 3 £580,000 Year 4 £500,000 This business uses straight-line depreciation and its cost of capital (the discount rate for investment appraisal is 10%). It is assumed that the new equipment will have a residual value of zero at the end of four years. Required: Calculate...

  • 1. ( Multinat PLC has asked you to evaluate the following project for the production of...

    1. ( Multinat PLC has asked you to evaluate the following project for the production of a new product. The firm has already spent £100,000 on marketing consultant fees to estimate potential sales of the new item. You are going to charge a fee of £10,000 to undertake the project evaluation. You know that it will initially be necessary to invest E1m in a piece of new machinery. It has been estimated that expected sales are 100 items of the...

  • Calculate NPV based on cash flow and payback period

    Suppose you are evaluating a project with the cash inflows shown in the following table. Your boss has asked you to calculate the project’s net present value (NPV). You don’t know the project’s initial cost, but you do know the project’s regular, or conventional, payback period is 2.50 years.The project's annual cash flows are:YearCash FlowYear 1$375,000Year 2450,000Year 3300,000Year 4400,000If the project’s desired rate of return is 9.00%, the project’s NPV—rounded to the nearest whole dollar—is     .Which of the following...

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