Consider each of the following independent cases. Required: 1. Hals Stunt Company is investing $120,000 in a

Question:

Consider each of the following independent cases.
Required:
1. Hal’s Stunt Company is investing $120,000 in a project that will yield a uniform series of cash inflows over the next four years. If the is 14 percent, how much cash inflow per year can be expected?
2. Warner Medical Clinic has decided to invest in some new blood diagnostic equipment. The equipment will have a three-year life and will produce a uniform series of cash savings. The of the equipment is $1,750, using a of 8 percent. The is 12 percent. Determine the investment and the amount of cash savings realized each year.
3. A new lathe costing $60,096 will produce savings of $12,000 per year. How many years must the lathe last if an IRR of 18 percent is realized?
4. The NPV of a new product (a new brand of candy) is $6,075. The product has a life of four years and produces the following cash flows:
Year 1 .....$15,000
Year 2 ..... 20,000
Year 3 ..... 30,000
Year 4 ..... ?
The cost of the project is three times the cash flow produced in Year 4. The is 10 percent. Find the cost of the project and the cash flow for Year 4. Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment... Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...