Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Could u please just calculate cash flow of each year for each project? Also please calculate the five evaluation techniques. The management of a company

image text in transcribedCould u please just calculate cash flow of each year for each project? Also please calculate the five evaluation techniques.

The management of a company is considering the manufacture of an electronic product. The Research and Development teams have searched two machines, A and B, both of which make the same products. They now come to seek your advice. The projected quantity of each machine and other information are presented below: The price of each unit is $1,000, and the variable cost is 40% of the selling price. Fixed costs are $10,000 no matter which machine would be used. For either machine, net working capital is estimated to be 20% of next year's sale; it is also estimated to be zero at the end of year 5 . The required rate of return of a similar production is 10%. Company tax rate is 30%. Requirements: 1. In Excel: a. Use Tables in textbook chapter 10 as templates, construct project cash flow of year 0 to 5 . b. Calculate the payback period, discounted payback period, net present value, internal rate of return, and profitability index for each project. 2. In Word: a. Present the results of five evaluation techniques for each project. Make decision by each technique, respectively, with explanation. b. Do the five evaluation techniques lead to consistent decision? Discuss. c. Make your final decision and explain

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Finance questions