Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. Evaluate the following projects and fill in the blank cells highlighted in blue. If there are multiple IRRs for a project, you don't need

1. Evaluate the following projects and fill in the blank cells highlighted in blue. If there are multiple IRRs for a project, you don't need to list all of them. Giving one IRR would be good. Time Period 0 1 2 3 4 5 Discount Rate Payback Period Discounted Payback PI NPV IRR A -200000 80000 92000 9800 121670 139921 20.00% B -504 2862 -6070 6700 -2000 15.00% 0.176 0.203 C 25000 -26000 13000 10.00% 1.077 N/A -0.52 2. TB Cylinder is considering the purchase of new machines. The total cost of the new machines is $85,000. The company expects the use of the machines to increase sales by I $8,000 each year. The machine belongs to asset class 43 with a CCA rate of 30%, and TB Cylinder expects to sell the machines at the end of its 5-year operating life for $15,000. The firm expects that the new machines will require an immediate investment of $12,000 in net working capital and the net working capital will increase by 5% each year in the following years. Suppose TB Cylinder's marginal tax rate is 34%, and it uses a 10 percent cost of capital to evaluate projects of this nature. What is the NPV of the project?
image text in transcribed
1. Evaluate the following projects and fill in the blank cells highlighted in blue. If there are multiple IRRs for a project, you don't need to list all of them. Giving one IRR would be good. 2. TB Cylinder is considering the purchase of new machines. The total cost of the new $8,000 each year. The machine belongs to asset class 43 with a CCA rate of 30%, and TB Cylinder expects to sell the machines at the end of its 5-year operating life for $15,000. The firm expects that the new machines will require an immediate investment of $12,000 in net working capital and the net working capital will increase by 5% each year in the following years. Suppose TB Cylinder's marginal tax rate is 34%, and it uses a 10 percent cost of capital to evaluate projects of this nature. What is the NPV of the project? 1. Evaluate the following projects and fill in the blank cells highlighted in blue. If there are multiple IRRs for a project, you don't need to list all of them. Giving one IRR would be good. 2. TB Cylinder is considering the purchase of new machines. The total cost of the new $8,000 each year. The machine belongs to asset class 43 with a CCA rate of 30%, and TB Cylinder expects to sell the machines at the end of its 5-year operating life for $15,000. The firm expects that the new machines will require an immediate investment of $12,000 in net working capital and the net working capital will increase by 5% each year in the following years. Suppose TB Cylinder's marginal tax rate is 34%, and it uses a 10 percent cost of capital to evaluate projects of this nature. What is the NPV of the project

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ISE Managerial Accounting

Authors: Ray H. Garrison, Eric Noreen, Peter C. Brewer

17th Edition

1260575683, 9781260575682

Students also viewed these Accounting questions

Question

Show that EQ CFG is undecidable.

Answered: 1 week ago