Homework Answers
Calculation of payback period:
| Annual cash flow | Cumulative cash flow |
| 135000 | 135000 |
| 125000 | 260000 |
| 110000 | 370000 |
| 100000 | |
| 70000 |
Therefore payback period = 2nd year + part of 3rd year for $ 108000
= 2 + 0.98
Payback period = 2.98 years
Calculation of Average rate of return (ARR) :
Average Rate of Return = 18.6 %
Calculation of Net Present Value (NPV) :
| Years | Annual cash flows | Present Value factor @12% | Present Value of Annual cash flow |
| 1 | 135000 | 0.892857 | 120535.71 |
| 2 | 125000 | 0.797193 | 99649.23 |
| 3 | 110000 | 0.711780 | 78295.82 |
| 4 | 100000 | 0.635518 | 63551.80 |
| 5 | 70000 | 0.567426 | 39719.87 |
| 5 | 18000 | 0.567426 | 10213.68 |
Total Present Value of inflows = 411966.11
(-) Present Value of outflows. = 368000
Therefore Net Present Value = 43966
Calculation of Present Value index :
Profitability index = 1.119
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TEXT VERSION: Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment...
TEXT VERSION:
Average Rate of Return Method, Net Present Value Method, and
Analysis
The capital investment committee of Ellis Transport and Storage
Inc. is considering two investment projects. The estimated income
from operations and net cash flows from each investment are as
follows:
Warehouse
Tracking Technology
Year
Income from
Operations
Net Cash
Flow
Income from
Operations
Net Cash
Flow
1
$47,500
$152,000
$100,000
$243,000
2
47,500
152,000
76,000
205,000
3
47,500
152,000
38,000
144,000
4
47,500
152,000
17,000
99,000
5...
Average Rate of Return Method, Net Present Value Method, and analysis for a flervice Company The capital investment Committee of the Transport and Storage Inc. is considering to investment projects. The estimated income from operations and are as follows cash flows from each investment Warehous Tracking Technology Income from Operations Income from Operations Flow I $ 61,400 $135.000 $ 34,400 $108.00 51,400 125,000 34.400 100,000 36,400 110,000 34.400 100,000 26.400 100.000 34.400 100,000 (3.600) 70.000 34,400 100.000 $172,000 $540,000 $172.000...
Average rates of Return Method, Net Present Value Method, and And The capital investment committee of Ellis Transport and Storage Inc. is considering two The estimated income from operations and net cash flows from each investment are as follows: Tracking Technology Year Income from Net Cash $251.000 wNw Warehouse Income from Net Cash Operations Flow $52,200 $157,000 52,200 157,000 52,200 157,000 52,200 157,000 52,200 157,000 $261,000 $785,000 34,000 212.000 149.00 42,000 18,000 7.000 Total 61,000 $785,000 Each project requires an...
Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Warehouse Tracking Technology Year Income from Operations Net Cash Flow Income from Operations Net Cash Flow $53,200 $167,000 $267,000 53,200 167,000 225,000 $112,000 85,000 43,000 19,000 53,200 167,000 159,000 53,200 167,000 109,000 53,200 167,000 7,000 75,000 Total $266,000 $835,000...
Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Warehouse Tracking Technology Year Income from Operations Net Cash Flow Income from Operations Net Cash Flow $40,000 40,000 40,000 40,000 40,000 $200,000 $128,000 128,000 128,000 128,000 128,000 $640,000 $84,000 64,000 32,000 14,000 6,000 $200,000 $205,000 173,000 122,000 83,000 57,000...
Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Warehouse Net Cash Tracking Technology Income from Net Cash Operations Flow Year Flow $326,000 275,000 Income from Operations $65,100 65,100 65,100 65,100 65,100 $325,500 194,000 $204,000 204,000 204,000 204,000 204,000 $1,020,000 $137,000 104,000 52,000 23,000 9,500 9,500 $325,500 133,000...
TEXT VERSION:
Average Rate of Return Method, Net Present Value Method, and
Analysis
The capital investment committee of Ellis Transport and Storage
Inc. is considering two investment projects. The estimated income
from operations and net cash flows from each investment are as
follows:
Warehouse
Tracking Technology
Year
Income from
Operations
Net Cash
Flow
Income from
Operations
Net Cash
Flow
1
$47,500
$152,000
$100,000
$243,000
2
47,500
152,000
76,000
205,000
3
47,500
152,000
38,000
144,000
4
47,500
152,000
17,000
99,000
5...
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