Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Can I please get help with the attached NPV and IRR: Unequal Annual Net Cash Inflows Salt River Company is evaluating a capital expenditure proposal

image text in transcribed

Can I please get help with the attached

NPV and IRR: Unequal Annual Net Cash Inflows Salt River Company is evaluating a capital expenditure proposal that has the following predicted cash flows

image text in transcribed 1 2 3 4 5 1 NPV and IRR: Unequal Annual Net Cash Inflows Salt River Company is evaluating a capital expenditure proposal that has the following predicted cash flows: Initial investment $(46,420) Operation Year 1 20,000 Year 2 20,000 Year 3 20,000 Salvage 0 (a) Using a discount rate of 10 percent, determine the net present value of the investment proposal. (Round to the nearest whole number.) $ Answer 0 0.00 points out of 1.00 (b) Determine the proposal's internal rate of return. (Round to the nearest whole percentage.) Answer 0 0.00 points out of 1.00 % 2 Payback Period, IRR, and Minimum Cash Flows The management of Mesquite Limited is currently evaluating the following investment proposal: Time 0 Year 1 Year 2 Year 3 Year 4 Initial investment $270,00 0 Net operating cash inflows $100,00 $100,00 $100,00 $100,000 0 0 0 (a) Determine the proposal's payback period. Answer 0 0.00 points out of 1.00 years (b) Determine the proposal's internal rate of return. (Refer to Appendix 12B if you use the table approach.) Answer 0 0.00 points out of 1.00 % (c) Given the amount of the initial investment, determine the minimum annual net cash inflows required to obtain an internal rate of return of 8 percent. Round the answer to the nearest dollar. $ Answer 0 3 Time Value of Money: Basics Using Table 12A.1 and Table 12A.2 of this chapter, determine the answers to each of the following independent situations. (Round answers to the nearest whole number.) (a) The future value in three years of $1,000 deposited today in a savings account with interest compounded annually at 9 percent. $ Answer 0 0.00 points out of 1.00 (b) The present value of $7,000 to be received in two years, discounted at 10 percent. $ Answer 0 0.00 points out of 1.00 (c) The present value of an annuity of $8,000 per year for six years discounted at 12 percent. $ Answer 0 0.00 points out of 1.00 (d) An initial investment of $18,556 is to be returned in eight equal annual payments. Determine the amount of each payment if the interest rate is 14 percent. $ Answer 0 0.00 points out of 1.00 (e) A proposed investment will provide cash flows of $30,000, $7,000, and $5,000 at the end of Years 1, 2, and 3, respectively. Using a discount rate of 16 percent, determine the present value of these cash flows. Year 1 $ Answer 0 Year 2 $ Answer Year 3 $ Answer 0 0 (f) Find the present value of an investment that will pay $5,000 at the end of Years 10, 11, and 12. Use a discount rate of 10 percent. $ Answer 0 Check 4 NPV and IRR: Equal Annual Net Cash Inflows Apache Junction Company is evaluating a capital expenditure proposal that requires an initial investment of $9,350, has predicted cash inflows of $2,000 per year for 15 years, and has no salvage value. (a) Using a discount rate of 14 percent, determine the net present value of the investment proposal. (Round to the nearest whole number.) $Answer 0 0.00 points out of 1.00 (b) Determine the proposal's internal rate of return. Answer 0 0.00 points out of 1.00 % (c) What discount rate would produce a net present value of zero? Answer 0 0.00 points out of 1.00 % 5 Ranking Investment Proposals: Payback Period, Accounting Rate of Return, and Net Present Value Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal Proposal Y Proposal Z X Initial investment $81,000 $81,000 $81,000 Cash flow from operations Year 1 80,000 40,500 81,000 Year 2 1,000 40,500 Year 3 41,000 41,000 Disinvestment 0 0 0 Life (years) 3 years 3 years 1 year (a) Select the best investment proposal using the payback period, the accounting rate of return on initial investment, and the net present value criteria. Assume that the organization's cost of capital is 14 percent. Round accounting rate of return four decimal places. Round net present value to the nearest whole number. Use negative signs with your answers when appropriate. Payback period (years) Accounting rate of return Proposal X Answer 0 Proposal Y Answer 0 Proposal Z Answer 0 Best proposal Answer 0.00 points out of 0.00 points out of 0.00 points out of 1.00 1.00 1.00 Answer Answer Answer 0 0 0 0.00 points out of 0.00 points out of 1.00 points out of 1.00 1.00 1.00 Answer Proposal X Answer 0 Net present value Proposal Y Answer 0 Proposal Z Answer 0 0.00 points out of 0.00 points out of 0.00 points out of 1.00 1.00 1.00 Best proposal Answer 1 NPV and IRR: Unequal Annual Net Cash Inflows Salt River Company is evaluating a capital expenditure proposal that has the following predicted cash flows: Initial investment $(46,420) Operation Year 1 20,000 Year 2 20,000 Year 3 20,000 Salvage 0 (a) Using a discount rate of 10 percent, determine the net present value of the investment proposal. (Round to the nearest whole number.) $ Answer 0 0.00 points out of 1.00 (b) Determine the proposal's internal rate of return. (Round to the nearest whole percentage.) Answer 0 0.00 points out of 1.00 % 2 Payback Period, IRR, and Minimum Cash Flows The management of Mesquite Limited is currently evaluating the following investment proposal: Time 0 Year 1 Year 2 Year 3 Year 4 Initial investment $270,00 0 Net operating cash inflows $100,00 $100,00 $100,00 $100,000 0 0 0 (a) Determine the proposal's payback period. Answer 0 0.00 points out of 1.00 years (b) Determine the proposal's internal rate of return. (Refer to Appendix 12B if you use the table approach.) Answer 0 0.00 points out of 1.00 % (c) Given the amount of the initial investment, determine the minimum annual net cash inflows required to obtain an internal rate of return of 8 percent. Round the answer to the nearest dollar. $ Answer 0 3 Time Value of Money: Basics Using Table 12A.1 and Table 12A.2 of this chapter, determine the answers to each of the following independent situations. (Round answers to the nearest whole number.) (a) The future value in three years of $1,000 deposited today in a savings account with interest compounded annually at 9 percent. $ Answer 0 0.00 points out of 1.00 (b) The present value of $7,000 to be received in two years, discounted at 10 percent. $ Answer 0 0.00 points out of 1.00 (c) The present value of an annuity of $8,000 per year for six years discounted at 12 percent. $ Answer 0 0.00 points out of 1.00 (d) An initial investment of $18,556 is to be returned in eight equal annual payments. Determine the amount of each payment if the interest rate is 14 percent. $ Answer 0 0.00 points out of 1.00 (e) A proposed investment will provide cash flows of $30,000, $7,000, and $5,000 at the end of Years 1, 2, and 3, respectively. Using a discount rate of 16 percent, determine the present value of these cash flows. Year 1 $ Answer 0 Year 2 $ Answer Year 3 $ Answer 0 0 (f) Find the present value of an investment that will pay $5,000 at the end of Years 10, 11, and 12. Use a discount rate of 10 percent. $ Answer 0 Check 4 NPV and IRR: Equal Annual Net Cash Inflows Apache Junction Company is evaluating a capital expenditure proposal that requires an initial investment of $9,350, has predicted cash inflows of $2,000 per year for 15 years, and has no salvage value. (a) Using a discount rate of 14 percent, determine the net present value of the investment proposal. (Round to the nearest whole number.) $Answer 0 0.00 points out of 1.00 (b) Determine the proposal's internal rate of return. Answer 0 0.00 points out of 1.00 % (c) What discount rate would produce a net present value of zero? Answer 0 0.00 points out of 1.00 % 5 Ranking Investment Proposals: Payback Period, Accounting Rate of Return, and Net Present Value Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal Proposal Y Proposal Z X Initial investment $81,000 $81,000 $81,000 Cash flow from operations Year 1 80,000 40,500 81,000 Year 2 1,000 40,500 Year 3 41,000 41,000 Disinvestment 0 0 0 Life (years) 3 years 3 years 1 year (a) Select the best investment proposal using the payback period, the accounting rate of return on initial investment, and the net present value criteria. Assume that the organization's cost of capital is 14 percent. Round accounting rate of return four decimal places. Round net present value to the nearest whole number. Use negative signs with your answers when appropriate. Payback period (years) Accounting rate of return Proposal X Answer 0 Proposal Y Answer 0 Proposal Z Answer 0 Best proposal Answer 0.00 points out of 0.00 points out of 0.00 points out of 1.00 1.00 1.00 Answer Answer Answer 0 0 0 0.00 points out of 0.00 points out of 1.00 points out of 1.00 1.00 1.00 Answer Proposal X Answer 0 Net present value Proposal Y Answer 0 Proposal Z Answer 0 0.00 points out of 0.00 points out of 0.00 points out of 1.00 1.00 1.00 Best proposal

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

Step: 3

blur-text-image

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

Financial Accounting

Authors: Jeffrey Waybright, Robert Kemp, Sherif Elbarrad

2nd Canadian edition

133375536, 9780133845396, 133845397, 978-0133375534

More Books

Students also viewed these Accounting questions