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Chapter 7. Need help with the grey-shaded areas. I have already gone through and answered but mainly want a double check on everything. Please include
Chapter 7. Need help with the grey-shaded areas. I have already gone through and answered but mainly want a double check on everything. Please include the formulas!
Company is Considering one of two products. Which one is better? \begin{tabular}{|l|rr|rr|} \hline Company Data & Product A & \multicolumn{2}{|l|}{ Product B } \\ \hline Initial Investment & $ & (170,000) & $ & (380,000) \\ \hline Project Length (Years) & 5 & 5 \\ \hline Discount Rate & 16% & 16% \\ \hline \end{tabular} \begin{tabular}{|l|rr|rr|} \hline Annual Project Expenses \\ \hline Project Revenues & $ & 250,000 & $ & 350,000 \\ \hline Project Variable Expenses & $ & 120,000 & $ & 170,000 \\ \hline Project Depreciation Expense & $ & 34,000 & $ & 76,000 \\ \hline Project Fixed Expenses & $ & 70,000 & $ & 50,000 \\ \hline \end{tabular} 1 What is the annual Cash Flow from each Investment? \begin{tabular}{|l|rrrr|} & \multicolumn{2}{l|}{ Product A } & \multicolumn{2}{l|}{ Product B } \\ Net Income & $ & 234,000 & $ & 306,000 \\ Plus Depreciation & $ & 34,000 & $ & 76,000 \\ \hline Annual CF & $ & 268,000 & $ & 382,000 \\ \hline \end{tabular} 2 What is the payback period for each product? \begin{tabular}{|c|cr|rr|} \cline { 2 - 5 } \multicolumn{1}{c|}{} & \multicolumn{4}{c|}{ Product A } \\ \hline Year & \multicolumn{2}{|c|}{ Cash Flow } & \multicolumn{2}{|c|}{ Aggregate } \\ \hline 0 & $ & (170,000) & $ & (170,000) \\ \hline 1 & $ & 268,000 & $ & 98,000 \\ \hline 2 & $ & 268,000 & $ & 366,000 \\ \hline 3 & $ & 268,000 & $ & 634,000 \\ \hline 4 & $ & 268,000 & $ & 902,000 \\ \hline 5 & $ & 268,000 & $ & 1,170,000 \\ \hline \end{tabular} \begin{tabular}{|lr|rr|} \hline \multicolumn{4}{|c|}{ Product B } \\ \hline \multicolumn{2}{|l|}{ Cash Flow } & \multicolumn{2}{|l|}{ Aggregate } \\ \hline$ & (380,000) & $ & (380,000) \\ \hline$ & 382,000 & $ & 2,000 \\ \hline$ & 382,000 & $ & 384,000 \\ \hline$ & 382,000 & $ & 766,000 \\ \hline$ & 382,000 & $ & 1,148,000 \\ \hline$ & 382,000 & $ & 1,530,000 \\ \hline \end{tabular} Full Year Partial Year Payback 3 Full Year Partial Year 3 Payback 2.01 2.37 5.37 5.01 (Use formula) Single Step PB 3 Calculate IRR for each Project \begin{tabular}{|c|c|c|c|c|c|c|} \hline & A & B & C & D & E & G \\ \hline \multicolumn{7}{|l|}{34} \\ \hline 35 & 3 & \multicolumn{2}{|l|}{3 Calculate IRR for each Project } & & & \\ \hline 36 & & & Product A & Product B & & \\ \hline 37 & & IRR & & & & \\ \hline \multicolumn{7}{|l|}{38} \\ \hline 39 & & 4 Simple Rate of Return & & & & \\ \hline \multicolumn{7}{|l|}{40} \\ \hline 41 & & Average net Income & $268,000 & 382,000 & & \\ \hline 42 & & Investment & $(170,000) & (380,000) & & \\ \hline 43 & & SRR & \multirow[t]{2}{*}{157.65%} & 100.53% & & \\ \hline 44 & & & & & & \\ \hline 45 & & 5 Net Present Value & \multicolumn{2}{|c|}{ Product A } & \multicolumn{2}{|c|}{ Product B } \\ \hline 46 & & Year & Cash Flow & PV & Cash Flow & PV \\ \hline 47 & & 0 & $(170,000.00) & $(170,000.00) & $(380,000.00) & $(380,000.00) \\ \hline 48 & & 1 & $268,000.00 & & $382,000.00 & \\ \hline 49 & & 2 & $268,000.00 & & $382,000.00 & \\ \hline 50 & & 3 & $268,000.00 & & $382,000.00 & \\ \hline 51 & & 4 & $268,000.00 & & $382,000.00 & \\ \hline 52 & & 5 & $268,000.00 & ($877,510.70) & $382,000.00 & ($1,250,780.18) \\ \hline \multicolumn{7}{|l|}{53} \\ \hline 54 & & & NPV & ($1,047,510.70) & NPV & ($1,630,780.18) \\ \hline \multicolumn{7}{|l|}{55} \\ \hline 56 & 6 & Present Value (profitability) & II Product A & Product B & & \\ \hline 57 & & PV Inflows & ($877,510.70) & ($1,250,780.18) & & \\ \hline 58 & & PV Outflows & 5.00 & 5.00 & & \\ \hline 59 & & PVI & ($877,505.70) & ($1,250,775.18) & & \\ \hline 60 & & & & & & \\ \hline \end{tabular} 7 Which product is better and why based on the information aboveStep by Step Solution
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