Benson Company has a choice of two investment alternatives. The present value of cash inflows and...
Benson Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $140,000 and $106,000, respectively. The present value of cash inflows and outflows for the second alternative is $315,000 and $270,000, respectively.
Required
-
Calculate the net present value of each investment opportunity. (Negative amounts should be indicated by a minus sign.)
-
Calculate the present value index for each investment opportunity. (Round "PVI" to 2 decimal places.)
-
Indicate which investment will produce the higher rate of return.
Homework Answers
a) Net present value = Present value of cash inflow-Present value of cash outflow
Option 1 = 140000-106000 = 34000
Option 2 = 315000-270000 = 45000
b) Present value index = Present value of cash inflow/Present value of cash outflow
Option 1 = 140000/106000 = 1.32
Option 2 = 315000/270000 = 1.17
c) First alternative produce the higher rate of return
Add Answer to:
Benson Company has a choice of two investment alternatives. The
present value of cash inflows and...
Adams company has a choice of two investment alternatives. the present value of cash inflows Exercise...
Adams company has a choice of two investment alternatives. the
present value of cash inflows
Exercise 16-7 Using the present value index LO 16-2 Adams Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $130,000 and $102.000, respectively. The present value of cash inflows and outflows for the second alternative is $305,000 and $265,000, respectively Required a. Calculate the net present value of each investment opportunity. (Negative amounts...
Stuart Company has a choice of two investment alternatives. The present value of cash inflows and...
Stuart Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $200,000 and $162,000, respectively. The present value of cash inflows and outflows for the second alternative is $375,000 and $300,000, respectively. Required a. Calculate the net present value of each investment opportunity. (Negative amounts should be indicated by a minus sign.) b. Calculate the present value index for each investment opportunity. (Round "PVI" to 2 decimal places.) c....
Gibson Company has a choice of two investment alternatives. The present value of cash inflows and...
Gibson Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $165,000 and $116,000, respectively. The present value of cash inflows and outflows for the second alternative is $340,000 and $282,500, respectively. Required a. Calculate the net present value of each investment opportunity. (Negative amounts should be indicated by a minus sign.) b. Calculate the present value index for each investment opportunity. (Round "PVI" to 2 decimal places.) c....
Gibson Company has a choice of two investment alternatives. The present value of cash inflows and...
Gibson Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $165,000 and $116,000, respectively. The present value of cash inflows and outflows for the second alternative is $340,000 and $282,500, respectively. Required a. Calculate the net present value of each investment opportunity. (Negative amounts should be indicated by a minus sign.) b. Calculate the present value index for each investment opportunity. (Round "PVI" to 2 decimal places.) c....
Vernon Company has a choice of two investment alternatives. The present value of cash inflows and...
Vernon Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $210,000 and $185,000, respectively. The present value of cash inflows and outflows for the second alternative is $385,000 and $305,000, respectively. Required a. Calculate the net present value of each investment opportunity. (Negative amounts should be indicated by a minus sign.) b. Calculate the present value index for each investment opportunity. (Round "PVI to 2 decimal places.) c....
Perez Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first...
Perez Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $180,000 and $154.000, respectively. The present value of cash inflows and outflows for the second alternative is $355,000 and $290,000, respectively. Required a. Calculate the net present value of each investment opportunity. (Negative amounts should be indicated by a minus sign.) b. Calculate the present value index for each investment opportunity. (Round "PVI" to 2 decimal places.) c....
roller company has a choice of two investment alternatives. The present value of cash inflows and...
roller company has a choice of two investment alternatives.
The present value of cash inflows and outflows for the first
alternative is $125,000 and $100,000, respectively. The present
value of cash inflows and outflows for the second alternative is
$300,000 and $262,500, respectively.
a. calculate the net present value of each investment
opportunity
b. calculate the present value index for each investment
opportunity
c. indicate which investment will produce the higher rate of
return
Exercise 10-7A Using the present value...
Munoz Company is considering investing in two new vans that are expected to generate combined cash inflows of $32,000 p...
Munoz Company is considering investing in two new vans that are expected to generate combined cash inflows of $32,000 per year. The vans' combined purchase price is $91,000. The expected life and salvage value of each are seven years and $21,400 respectively. Munoz has an average cost of capital of 14 percent. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) Required a. Calculate the net present value of the investment opportunity. (Negative amount should...
Information on four investment proposals is given below: Investment required Present value of cash inflows Net present...
Information on four investment proposals is given below: Investment required Present value of cash inflows Net present value Life of the project Investment Proposal A В D $(130,000) $( 140,000) $(150,000) $(1,260,000) 185,600 193,800 228,600 1,681, 100 $ 55,600 $ 53,800 $ 78,600 $ 421,100 5 years 7 years 6 years 6 years Required: 1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Investment...
Information on four investment proposals is given below: Investment required Present value of cash inflows Net...
Information on four investment proposals is given below: Investment required Present value of cash inflows Net present value Life of the project Investment Proposal B С D $(430,000) $(50,000) $(50,000) $(1,820,000) 631,600 70,500 76,800 2,429, 200 $ 201,600 $ 20,500 $ 26,800 $ 609,200 5 years 7 years 6 years 6 years Required: 1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Investment Proposal...
Adams company has a choice of two investment alternatives. the
present value of cash inflows
Exercise 16-7 Using the present value index LO 16-2 Adams Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $130,000 and $102.000, respectively. The present value of cash inflows and outflows for the second alternative is $305,000 and $265,000, respectively Required a. Calculate the net present value of each investment opportunity. (Negative amounts...
Stuart Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $200,000 and $162,000, respectively. The present value of cash inflows and outflows for the second alternative is $375,000 and $300,000, respectively. Required a. Calculate the net present value of each investment opportunity. (Negative amounts should be indicated by a minus sign.) b. Calculate the present value index for each investment opportunity. (Round "PVI" to 2 decimal places.) c....
Gibson Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $165,000 and $116,000, respectively. The present value of cash inflows and outflows for the second alternative is $340,000 and $282,500, respectively. Required a. Calculate the net present value of each investment opportunity. (Negative amounts should be indicated by a minus sign.) b. Calculate the present value index for each investment opportunity. (Round "PVI" to 2 decimal places.) c....
Gibson Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $165,000 and $116,000, respectively. The present value of cash inflows and outflows for the second alternative is $340,000 and $282,500, respectively. Required a. Calculate the net present value of each investment opportunity. (Negative amounts should be indicated by a minus sign.) b. Calculate the present value index for each investment opportunity. (Round "PVI" to 2 decimal places.) c....
Vernon Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $210,000 and $185,000, respectively. The present value of cash inflows and outflows for the second alternative is $385,000 and $305,000, respectively. Required a. Calculate the net present value of each investment opportunity. (Negative amounts should be indicated by a minus sign.) b. Calculate the present value index for each investment opportunity. (Round "PVI to 2 decimal places.) c....
Perez Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $180,000 and $154.000, respectively. The present value of cash inflows and outflows for the second alternative is $355,000 and $290,000, respectively. Required a. Calculate the net present value of each investment opportunity. (Negative amounts should be indicated by a minus sign.) b. Calculate the present value index for each investment opportunity. (Round "PVI" to 2 decimal places.) c....
roller company has a choice of two investment alternatives.
The present value of cash inflows and outflows for the first
alternative is $125,000 and $100,000, respectively. The present
value of cash inflows and outflows for the second alternative is
$300,000 and $262,500, respectively.
a. calculate the net present value of each investment
opportunity
b. calculate the present value index for each investment
opportunity
c. indicate which investment will produce the higher rate of
return
Exercise 10-7A Using the present value...
Munoz Company is considering investing in two new vans that are expected to generate combined cash inflows of $32,000 per year. The vans' combined purchase price is $91,000. The expected life and salvage value of each are seven years and $21,400 respectively. Munoz has an average cost of capital of 14 percent. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) Required a. Calculate the net present value of the investment opportunity. (Negative amount should...
Information on four investment proposals is given below: Investment required Present value of cash inflows Net present value Life of the project Investment Proposal A В D $(130,000) $( 140,000) $(150,000) $(1,260,000) 185,600 193,800 228,600 1,681, 100 $ 55,600 $ 53,800 $ 78,600 $ 421,100 5 years 7 years 6 years 6 years Required: 1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Investment...
Information on four investment proposals is given below: Investment required Present value of cash inflows Net present value Life of the project Investment Proposal B С D $(430,000) $(50,000) $(50,000) $(1,820,000) 631,600 70,500 76,800 2,429, 200 $ 201,600 $ 20,500 $ 26,800 $ 609,200 5 years 7 years 6 years 6 years Required: 1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Investment Proposal...
Most questions answered within 3 hours.
-
----Can someone please help me solve this one using JAVA
----I thank you in advance
Create...
asked 2 minutes ago -
) Raw materials are studied for contamination. Suppose that
the number of particles of contamination per...
asked 2 minutes ago -
1. What force primarily attracts the potassium ion to
the nitrate ion?
a. London forces...
asked 4 minutes ago -
What are the negative effects of abruptly stopping the use of
all fossil fuels? Give at...
asked 11 minutes ago -
Given that many conflict are the result of different parties having
different interests, is it possible...
asked 16 minutes ago -
A 750 g block can slide uniformly along the horizontal track
when a string attached to...
asked 19 minutes ago -
In 2017, Juan entered into a contract to write a book. The
publisher advanced Juan $50,000,...
asked 32 minutes ago -
Determine the number of kinds of protons in each molecule (w/
respect to NMR spectroscopy). Drawing...
asked 43 minutes ago -
A jeweler whose near point is 68 cm from his eye uses a
magnifying glass as...
asked 41 minutes ago -
A company wants to determine how many units of each of two
products, A and B,...
asked 45 minutes ago -
The blood pressure of a person changes throughout the day.
Suppose the systolic blood pressure of...
asked 53 minutes ago -
A chemistry student desired to study sulfur. Sulfur exhibited
the following characteristics with oxygen:
(a) It...
asked 49 minutes ago