ACCT 2332
Hello I need help with this question, thank you
Answer 1 | ||||||||
Computation of project's net present value | ||||||||
Year | 0 | 1 | 2 | 3 | 4 | 5 | NPV | |
Initial Investment | -$4,650,000.00 | |||||||
Operating Cash flow | $1,505,000.00 | $1,505,000.00 | $1,505,000.00 | $1,505,000.00 | $1,505,000.00 | |||
Net Cash flow | -$4,650,000.00 | $1,505,000.00 | $1,505,000.00 | $1,505,000.00 | $1,505,000.00 | $1,505,000.00 | ||
x Discount Factor @ 18% | 1 | 0.84746 | 0.71818 | 0.60863 | 0.51579 | 0.43711 | ||
Present Values | -$4,650,000.00 | $1,275,423.73 | $1,080,867.57 | $915,989.46 | $776,262.26 | $657,849.37 | $56,392.39 | |
Project's Net present value | $56,392.39 | |||||||
Calculation of yearly operating cash flow | ||||||||
Net operating Income | $760,000.00 | |||||||
Add : Depreciation | $745,000.00 | |||||||
Operating Cash flow | $1,505,000.00 | |||||||
Answer 2 | ||||||||
Computation of project's simple rate of return | ||||||||
Project's simple rate of return = Net Operating income / Initial Investment | ||||||||
Project's simple rate of return = $760000 / $4650000 = 16.34% | ||||||||
Answer 3-a | ||||||||
Yes, company want Derrick to pursue this investment opportunity as it has positive NPV. | ||||||||
Answer 3-b | ||||||||
No, Derrick will not be inclined to pursue this investment opportunity as it's simple rate of return is lower than | ||||||||
his division's return on investment. | ||||||||
ACCT 2332 Hello I need help with this question, thank you value 20.00 points Derrick Iverson...
Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division’s return on investment (ROI), which has been above 20% each of the last three years. Derrick is considering a capital budgeting project that would require a $4,140,000 investment in equipment with a useful life of five years and no salvage value. Holston Company’s discount rate is 16%. The project would provide net operating income each year for five years as follows:...
Exercise 13-9 Net Present Value Analysis and Simple Rate of Return [LO13-2, LO13-6] Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division's return on investment (ROI), which has been above 20% each of the last three years. Derrick is considering a capital budgeting project that would require a $4,000,000 investment in equipment with a useful life of five years and no salvage value. Holston Company's discount rate is 16%. The...
Exercise 13-9 Net Present Value Analysis and Simple Rate of Return [LO13-2, LO13-6] Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division’s return on investment (ROI), which has been above 20% each of the last three years. Derrick is considering a capital budgeting project that would require a $4,450,000 investment in equipment with a useful life of five years and no salvage value. Holston Company’s discount rate is 18%. The...
Help Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division's return on investment (ROI), which has been above 20% each of the last three years. Derrick is considering a capital budgeting project that would require a $4,450,000 investment in equipment with a useful life of five years and no salvage value. Holston Company's discount rate is 18%. The project would provide net operating income each year for five years as...
Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division's return on investment (ROI), which has been above 20% each of the last three years. Derrick is considering a capital budgeting project that would require a $3,080,000 investment in equipment with a useful life of five years and no salvage value. Holston Company's discount rate is 17%. The project would provide net operating income each year for five years as follows:...
Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division's return on investment (ROI), which has been above 20% each of the last three years. Derrick is considering a capital budgeting project that would require a $4,200,000 investment in equipment with a useful life of five years and no salvage value. Holston Company's discount rate is 18%. The project would provide net operating income each year for five years as follows:...
Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division’s return on investment (ROI), which has been above 20% each of the last three years. Derrick is considering a capital budgeting project that would require a $4,120,000 investment in equipment with a useful life of five years and no salvage value. Holston Company’s discount rate is 17%. The project would provide net operating income each year for five years as follows:...
Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division’s return on investment (ROI), which has been above 20% each of the last three years. Derrick is considering a capital budgeting project that would require a $3,050,000 investment in equipment with a useful life of five years and no salvage value. Holston Company’s discount rate is 16%. The project would provide net operating income each year for five years as follows:...
Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division's return on investment (ROI), which has been above 20% each of the last three years. Derrick is considering a capital budgeting project that would require a $3,200,000 investment in equipment with a useful life of five years and no salvage value. Holston Company's discount rate is 18%. The project would provide net operating income each year for five years as follows:...
Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division's return on investment (ROI), which has been above 20% each of the last three years. Derrick is considering a capital budgeting project that would require a $3,000,000 investment in equipment with a useful life of five years and no salvage value. Holston Company's discount rate is 15%. The project would provide net operating income each year for five years as follows:...