MarigoldCompany is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup...
MarigoldCompany is considering two capital investment proposals.
Estimates regarding each project are provided below:
| Project Soup | Project Nuts | |
| Initial investment | $305000 | $504000 |
| Annual net income | 30000 | 46000 |
| Net annual cash inflow | 110000 | 146000 |
| Estimated useful life | 5 years | 6 years |
| Salvage value | 0 | 0 |
The company requires a 10% rate of return on all new
investments.
| Present Value of an Annuity of 1 | ||||
| Periods | 9% | 10% | 11% | 12% |
| 5 | 3.89 | 3.791 | 3.696 | 3.605 |
| 6 | 4.486 | 4.355 | 4.231 | 4.111 |
The cash payback period for Project Nuts is
Homework Answers
Cash payback period for Project Nuts = Initial investment / Net annual cash inflow = $504,000 / $146,000 = 3.5 years
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MarigoldCompany is considering two capital investment proposals.
Estimates regarding each project are provided below:
Project Soup...
MetlockCompany is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup...
MetlockCompany is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts Initial investment $320000 $576000 Annual net income 30000 46000 Net annual cash inflow 110000 146000 Estimated useful life 5 years 6 years Salvage value 0 0 The company requires a 10% rate of return on all new investments. Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.89 3.791 3.696 3.605 6 4.486 4.355 4.231 4.111 The cash...
ildhorseCompany is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup...
ildhorseCompany is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts Initial investment $340000 $420000 Annual net income 30000 46000 Net annual cash inflow 110000 146000 Estimated useful life 5 years 6 years Salvage value 0 0 The company requires a 10% rate of return on all new investments. Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.89 3.791 3.696 3.605 6 4.486 4.355 4.231 4.111 The net...
Whispering WindsCompany is considering two capital investment proposals. Estimates regarding each project are provided below: Project...
Whispering WindsCompany is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts Initial investment $430000 $588000 Annual net income 30000 46000 Net annual cash inflow 110000 146000 Estimated useful life 5 years 6 years Salvage value 0 0 The company requires a 10% rate of return on all new investments. Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.89 3.791 3.696 3.605 6 4.486 4.355 4.231 4.111 The...
Skysong Company is considering two capital investment proposals. Estimates regarding each project are provided below: &nbs
Skysong Company is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts Initial investment $400,000 $600,000 Annual net income $18,000 34,000 Net annual cash inflow $96,000 119,000 Estimated useful life 5 years 6 years Salvage 0 0 The company requires a 10% rate of return on all new investments Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.89 3.791 3.696 3.605 6 4.486 4.355 ...
Multiple Choice Question 114 CullumberCompany is considering two capital investment proposals. Estimates regarding each project are...
Multiple Choice Question 114
CullumberCompany is considering two capital investment
proposals. Estimates regarding each project are provided
below:
Project Soup
Project Nuts
Initial investment
$200000
$400000
Annual net income
16000
46000
Net annual cash inflow
60000
97000
Estimated useful life
5 years
6 years
Salvage value
0
0
The company requires a 10% rate of return on all new
investments.
Present Value of an
Annuity of 1
Periods
9%
10%
11%
12%
5
3.89
3.791
3.696
3.605
6
4.486
4.355...
Stellan Manufacturing is considering the following two investment proposals: Proposal X Proposal Y Investment $ 724...
Stellan Manufacturing is considering the following two investment proposals: Proposal X Proposal Y Investment $ 724 comma 000$724,000 $ 510 comma 000$510,000 Useful life 5 years 4 years Estimated annual net cash inflows received at the end of each year $ 158 comma 000$158,000 $ 106 comma 000$106,000 Residual value $ 66 comma 000$66,000 $0 Depreciation method Straightminus−line Straightminus−line Annual discount rate 10% 9% Present value of an ordinary annuity of $1: 8% 9% 10% 1 0.926 0.917 0.909 2...
Johnson Company is considering purchasing one of two new machines. The following estimates are available for...
Johnson Company is considering purchasing one of two new machines. The following estimates are available for each machine: Machine 1 Machine 2 Initial cost $152,000 $169,000 Annual cash inflows 50,000 60,000 Annual cash outflows 15,000 20,000 Estimated useful life 6 years 6 years The company's minimum required rate of return is 9%. Present Value of an Annuity of 1 Period 8% 9% 10% 11% 12% 15% 6 4.623 4.486 4.355 4.231 4.111 3.784 Requirement: Compute Payback, NPV, PI, and IRR...
Rocco Manufacturing is considering following two investment proposals: Proposal X Proposal Y Investment $740,000 $508,000 Useful...
Rocco Manufacturing is considering following two investment proposals: Proposal X Proposal Y Investment $740,000 $508,000 Useful life 5 years 4 years Estimated annual net cash inflows received at the end of each year $154,000 $92,000 Residual value $66,000 $0 Depreciation method Straight-line Straight-line Annual discount rate 10% 9% Compute the present value of the future cash inflows from Proposal X. Present value of an ordinary annuity of $1: 8% 9% 10% 1 0.926 0.917 0.909 2 1.783 1.759 1.736 3...
U3 Company is considering three long-term capital investment proposals. Each investment has a useful life of...
U3 Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows. Project Bono Project Edge Project Clayton Capital investment $164,800 $180,250 $204,000 Annual net income: Year 1 14,420 18,540 27,810 2 14,420 17,510 23,690 3 14,420 16,480 21,630 4 14,420 12,360 13,390 5 14,420 9,270 12,360 Total $72,100 $74,160 $98,880 Depreciation is computed by the straight-line method with no salvage value. The company’s cost of capital...
U3 Company is considering three long-term capital investment proposals. Each investment has a useful life of...
U3 Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows. Project Bono Project Edge Project Clayton Capital investment $168,000 $183,750 $210,000 Annual net income: Year 1 14,700 18,900 28,350 2 14,700 17,850 24,150 3 14,700 16,800 22,050 4 14,700 12,600 13,650 5 14,700 9,450 12,600 Total $73,500 $75,600 $100,800 Depreciation is computed by the straight-line method with no salvage value. The company’s cost of capital...
Multiple Choice Question 114
CullumberCompany is considering two capital investment
proposals. Estimates regarding each project are provided
below:
Project Soup
Project Nuts
Initial investment
$200000
$400000
Annual net income
16000
46000
Net annual cash inflow
60000
97000
Estimated useful life
5 years
6 years
Salvage value
0
0
The company requires a 10% rate of return on all new
investments.
Present Value of an
Annuity of 1
Periods
9%
10%
11%
12%
5
3.89
3.791
3.696
3.605
6
4.486
4.355...
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