Capital investment $22,000 $7,000 $29,000 $10,000 Annual revenues $2,500 $3,000 in year one, increasing $250 each year thereafter 10 Annual expenses Useful life (years) 10
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You are the president of AMT Enterprises. You have the opportunity to expand your product line to include a new semi-conductor wafer fabrication line. In order to produce the new wafer, you must invest in a new production process. In addition to doing nothing, two mutually exclusive processes are currently available to produce the wafer. Should you produce this new wafer? In other words, which, if either, of the alternative processes should be chosen? Note:
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- Year Investment $13,000 $10,000 Cash Inflow $1,000 $2,000 $2,500 $4,000 $5,000 $4,000 $5,000 $4,000 $3,000 $2,000 Determine the Payback Period. 1234567899ements What is the total Wealth Accumulation of the following investment assuming the available after tax reinvestment rate is 5%? IRR 10.70% O $4,690,000 O $4,821,078 O $4,848,844 $4,905.989 n 0 $ 1 S 2 $ 3 $ AS 5 $ Investment $ (3,000,000) 240,000 250,000 260,000 266,000 3,674,000Income from Net Cash Year Operations Flow $100,000 $180,000 2 40,000 120,000 40,000 100,000 10,000 90,000 10,000 120,000 The net present value for this investment is 4, 5.
- W Screenshot (126).png Chapter 26 Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 2 3 4 1 64°F Internal rate of return method The internal rate of return method is used by Royston Construction Co. in analyzing a capital expenditure proposal that involves an investment of $17,946 and annual net cash flows of $6,000 for each of the 5 years of its useful life. 5 6 7 8 9 10 0.943 65°F Windy eBook 0.909 1.736 2.487 3.170 3.791 4.355 0.893 1.690 2.402 3.037 3.605 4.111 3.785 4.868 4.564 4.160 4.968 4.487 4.772 5.019 5.328 5.650 1.833 2.673 3.465 4.212 4.917 5.582 5.335 6.210 6.802 5.759 6.145 7.360 a. Determine a present value factor for an annuity of $1, which can be used in determining the internal rate of return. If required, round your answer to three decimal places. 0.870 1.626 2.283 2.855 ▬ ▬▬ ■ 3.353 0.833 1.528 2.106 Q Search 2 2.589 b. Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the…You are offered the opportunity to invest $95 000 in a business which will yield annual net cash inflows of $18 000 for a period of 8 years. What is the net present value of your investment? a. $86 603 b. $1029 c. $49 000 d. $46 000What is the present value of $1,000 to be received 4 years from today? Discount the cash flows at 8%, compounded continuously. O $925.93 O $670.32 O $1,377.13 O $735.03 O $726.15
- Georgetown Berbice Income before tax. 20,000 75,000Required rate of return. 12% 12%Investment 100,000 500,000 Calculate the residual income for Georgetown a. 1,500 b. 150,000 c. 15,000 d. 8,000Year 0 $10,000.00 1 $ 3,000.00 Project A Cash Flow Project B Cash Flow $11,000.00 $5,000.00 2 $ 4,000.00 $ 4,000.00 3 $ 5,000.00 $ 4,000.00 4 $3,000.00 $ 3,000.00 Assuming that the relevant cost of capital for both projects is 10%, you should be able to determine the net present value (NPV) and the internal rate of return (IRR) for both project. Assume now that the firm has capital rationing, but knows that its true reinvestment rate is 21%, while its cost of capital is 10 percent. Given this information, determine the modified net present value (MNPV) for Project A. $3,811.27 O $3,622.02 O $4,280.07 O $4,162.90 O $4,404.83Internal rate of return and modified internal rate of return. Quark Industries has three potential projects, all with an initial cost of $2,100,000. Given the discount rate and the future cash flow of each project in the following table, E, what are the IRRS and MIRRS of the three projects for Quark Industries?
- Question Content Area A project is estimated to cost $273,840 and provide annual net cash inflows of $60,000 for 7 years. Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 6 4.917 4.355 4.111 7 5.582 4.868 4.564 8 6.210 5.335 4.968 9 6.802 5.759 5.328 10 7.360 6.145 5.650 Determine the internal rate of return for this project by using the above present value of an annuity table.fill in the blank 1 of 1%What is the project's MIRR? r = 10.00% 0 Year Cash flows O a. 22.51% O b. 11.75% O c. 17.21% O d. 14.81% O e. 15.65% -$875 1 $300 2 $320 3 $340 $360A4 9a We find the following information on NPNG (No-Pain-No-Gain) Inc.: A4 9a EBIT = $2,000,000Depreciation = $250,000Change in net working capital = $100,000Net capital spending = $300,000 These numbers are projected to increase at the following supernormal rates for the next three years, and 5% after the third year for the foreseeable future: EBIT: 20%Depreciation: 10%Change in net working capital: 15%Net capital spending: 10% The firm’s tax rate is 35%, and it has 1,000,000 outstanding shares and $8,000,000 in debt. We have estimated the WACC to be 15%. a. Calculate the EBIT, Depreciation, Changes in NWC, and net capital spending for the next four years.