Back Manufacturing is considering three capital investment proposals. At this time, Back only has funds available to
Question:
Equipment A Present value of net cash inflows 1,695,378 Initial investment NPV Equipment B Equipment C 1,969,888 2,169,724 (1,903,267) $ 368,353266,457 (1,356,302) (1,601,535) 339,076
Step by Step Answer:
Equipment Present value of net cash inflows Initial investment Profitability Index A 1695378 1356302 ...View the full answer
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
Related Video
NPV stands for \"Net Present Value,\" which is a financial concept used to determine the value of an investment or project. It measures the difference between the present value of cash inflows and the present value of cash outflows over a given period of time, using a specific discount rate. To calculate the NPV of an investment, you need to first estimate the cash inflows and outflows associated with the investment, and then discount them back to their present values using a discount rate. The discount rate represents the cost of capital or the expected rate of return required by investors. The formula for calculating NPV is: NPV = sum of (cash inflows / (1 + discount rate)^t) - sum of (cash outflows / (1 + discount rate)^t) Where: Cash inflows: the expected cash received from the investment Cash outflows: the expected cash paid out for the investment Discount rate: the required rate of return or the cost of capital t: the time period in which the cash flow occurs If the NPV is positive, it means that the investment is expected to generate a return higher than the required rate of return or the cost of capital, and it may be considered a good investment. If the NPV is negative, it means that the investment is not expected to generate a return higher than the required rate of return or the cost of capital, and it may be considered a bad investment.
Students also viewed these Accounting questions
-
Hudson Manufacturing is considering three capital investment proposals. At this time, Hudson only has funds available to pursue one of the three investments. Which investment should Hudson pursue at...
-
Brighton Manufacturing is considering three capital investment proposals. At this time, Brighton only has funds available to pursue one of the three investments. Requirement 1. Which investment...
-
Hudson Manufacturing is considering three capital investment proposals. At this time, Hudson only has funds available to pursue one of the three investments. Which investment should Hudson pursue at...
-
The following data has been extracted from last quarter's budget of Elise Ltd, which manufactures and sells a single product. January February March Production units 6200 6200 5800 Sales units 5900...
-
Give examples of democratic rights, mobility rights, legal rights, and equality rights as protected under the Charter. Give examples of three other types of rights protected under the Charter.
-
The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31, 2021 ($ in thousands): sales revenue, $19,100; cost...
-
Course grades. Choose a student at random from all who took Math 101 in recent years. The probabilities for the students grade are Grade: A B C D F Probability: 0.2 0.4 0.2 0.1 ? (a) What must be the...
-
The time between calls to a corporate office is exponentially distributed with a mean of 10 minutes. (a) What is the probability that there are more than three calls in one-half hour? (b) What is the...
-
The Common Stock account for Baltimore Corporation on January 1, 2020 was $75,000. On July 1, 2020 Baltimore issued an additional 10,000 shares of common stock. The Common Stock is $5 par. There was...
-
Water at 15°C is drained from a large reservoir using two horizontal plastic pipes connected in series. The first pipe is 20 m long and has a 10-cm diameter, while the second pipe is 35 m long...
-
Refer to the data regarding Juda Products in Exercise E26-24. Compute the IRR of each project, and use this information to identify the better investment. In Exercise 26.24 Use the NPV method to...
-
Mountain Manufacturing is considering the following capital investment proposals. Mountains requirement criteria include a maximum payback period of five years and a required rate of return of 12.5%....
-
Merrill acquires 100 percent of the outstanding voting shares of Harriss Company on January 1, 2008. To obtain these shares, Merrill pays $200,000 in cash and issues 10,000 shares of its own $10 par...
-
Description: duff owes relatives $13,000 for college loans. find the required quarterly payment into a sinking fund if duff pays off the loan in 3 years and the interest rate is 8% per year...
-
1 3 , 9 5 0 ) Repairs and Maintenance ( $ 2 , 8 5 0 ) Utilities Expense ( $ 8 8 0 ) Operating Income $ 1 0 , 2 4 2 Other Income - Gain on Sale $ 3 0 0 Interest Expense ( $ 2 5 0 ) Earnings Before...
-
Description: The company currently has outstanding a bond with a 5.5 percent coupon rate and another bond with a 3.5 percent coupon rate. The firm has been informed by its investment banker that...
-
Find the equation of line joining the points (4, -3) and (-2, 7).
-
Calculate the work of reversible expansion of 1 mole of ideal gas at 25 degree celsius from 10 L to 20 L.
-
Consider the US monthly unemployment rate series from 1948 to 2020 in the file unrate 4820 . txt. Use lag-1 to lag-24 of the series as predictors to build a tree model for the US unemployment rate.
-
Critical reading SAT scores are distributed as N(500, 100). a. Find the SAT score at the 75th percentile. b. Find the SAT score at the 25th percentile. c. Find the interquartile range for SAT scores....
-
Find the natural frequencies and the amplitude ratios of the system shown in Fig. 5.41. k m1 00000 m2 FIGURE 5.41 System with two masses connected to a spring.
-
Jay and Mike are opening a paint store. There are no competing paint stores in the area. They must decide how to organize the business. They anticipate profits of $ 300,000 the first year, with the...
-
Terrific Comfort Specialists, Inc. reported the following stockholders equity on its balance sheet at June 30, 2014: Stockholders Equity Paid-In Capital: Preferred Stock5%,? Par Value; 650,000 shares...
-
B-Mobile Wireless needed additional capital to expand, so the business incorporated. The charter from the state of Georgia authorizes B-Mobile to issue 70,000 shares of 5%, $ 100 par value cumulative...
-
Flexible manufacturing places new demands on the management accounting information system and how performance is evaluated. In response, a company should a. institute practices that reduce switching...
-
Revenue and expense items and components of other comprehensive income can be reported in the statement of shareholders' equity using: U.S. GAAP. IFRS. Both U.S. GAAP and IFRS. Neither U.S. GAAP nor...
-
Kirk and Spock formed the Enterprise Company in 2010 as equal owners. Kirk contributed land held an investment ($50,000 basis; $100,000 FMV), and Spock contributed $100,000 cash. The land was used in...
Study smarter with the SolutionInn App