Hi Winnie,

May you help assist answering the following questions and show work on excel, please.

P10-2

P10-10

P10-26

P10-22

P11-3

P11-12

P12-2

P12-4

Thanks.

Payback comparisons Nova Products has a 5-year maximum acceptable payback period. The firm is considering the purchase of a new machine and must choose between two alternative ones. The first machine requires an initial investment of $14,000 and generates annual after-tax cash inflows of $3,000 for each of the next 7 years. The second machine requires an initial investment of $21,000 and provides an annual cash inflow after taxes of $4,000 for 20 years. a) Determine the payback period for each machine. b) Comment on the acceptability of the machines, assuming that they are independent projects. c) Which machine should the firm accept? Why? d) Do the machines in this problem illustrate any of the weaknesses of using payback? Discuss. choose between d provides NPV: Mutually exclusive projects Hook Industries is considering the replacement of one of its old drill presses. Three alternative replacement presses are under consideration. The relevant cash flows associated with each are shown in the following table. The firm's cost of capital is 15%. Initial investment (CF 0) Year (t) 1 2 3 4 5 6 7 8 Press A Press B Press C $85,000 $60,000 $130,000 Cash inflows (CFt) $18,000 $12,000 $50,000 $18,000 $14,000 $30,000 $18,000 $16,000 $20,000 $18,000 $18,000 $20,000 $18,000 $20,000 $20,000 $18,000 $25,000 $30,000 $18,000 ------$40,000 $18,000 ------$50,000 a. Calculate the net present value (NPV) of each press. b. Using NPV, evaluate the acceptability of each press. c. Rank the presses from best to worst using NPV. d. Calculate the profitability index (PI) for each press. e. Rank the presses from best to worst using PI. acement of er consideration. IRR: Mutually exclusive projects Bell Manufacturing is attempting to choose the better of two mutually exclusive projects for expanding the firm's warehouse capacity. The relevant cash flows for the projects are shown in the following table. The firm's cost of capital is 15%. Project X Project Y Initial Investment (CF0 $500,000 $325,000 Cash Inflows (CFt) Year (t) 1 $ 100,000.00 $ 140,000.00 2 $120,00 $ 120,000.00 3 $ 150,000.00 $ 95,000.00 4 $ 190,000.00 $ 70,000.00 5 $ 250,000.00 $ 50,000.00 a. Calculate the IRR to the nearest whole percent for each of the projects. b. Assess the acceptability of each project on the basis of the IRRs found in part a. c. Which project, on this basis, is preferred? o choose the rehouse capacity. und in part a. Payback, NPV, and IRR Rieger International is attempting to evaluate the feasibility of investing $95,000 in a piece of equipment that has a 5-year life. The firm has estimated the cash inflows associated with the proposal as shown in the following table. The firm has a 12% cost of capital. Year (t) $ 1.00 $ 2.00 $ 3.00 $ 4.00 $ 5.00 Cash Inflows (CF0) $ 20,000.00 $ 25,000.00 $ 30,000.00 $ 35,000.00 $ 40,000.00 a. Calculate the payback period for the proposed investment. b. Calculate the net present value (NPV) for the proposed investment. c. Calculate the internal rate of return (IRR), rounded to the nearest whole percent, for the proposed investment. d. Evaluate the acceptability of the proposed investment using NPV and IRR. What recommendation would you make relative to implementation of the project? Why? has estimated Expansion versus replacement cash flows Edison Systems has estimated the cash flows over the 5-year lives for two projects, A and B. These cash flows are summarized in the table below. Initial Investment Year $ 1.00 $ 2.00 $ 3.00 $ 4.00 $ 5.00 Project A Project B $40,000 $12,000 Operating Cash Inflows $ 10,000.00 $ 6,000.00 $ 12,000.00 $ 6,000.00 $ 14,000.00 $ 6,000.00 $ 16,000.00 $ 6,000.00 $ 10,000.00 $ 6,000.00 *After- tax cahs inflow expected from liquidation a. If project A were actually a replacement for project B and the $12,000 initial investment shown for project B were the after-tax cash inflow expected from liquidating it, what would be the relevant cash flows for this replacement decision? b. How can an expansion decision such as project A be viewed as a special form of a replacement decision? Explain. mmarized al investment Initial investment: Basic calculation Cushing Corporation is considering the purchase of a new grading machine to replace the existing one. The existing machine was purchased 3 years ago at an installed cost of $20,000; it was being depreciated under MACRS using a 5-year recovery period. (See Table 4.2 on page 120 for the applicable depreciation percentages.) The existing machine is expected to have a usable life of at least 5 more years. The new machine costs $35,000 and requires $5,000 in installation costs; it will be depreciated using a 5-year recovery period under MACRS. The existing machine can currently be sold for $25,000 without incurring any removal or cleanup costs. The firm is subject to a 40% tax rate. Calculate the initial investment associated with the proposed purchase of a new grading machine. the purchase ne was purchased he applicable able life of at n installation removal or nvestment Breakeven cash inflows The One Ring Company, a leading producer of fine cast silver jewelry, is considering the purchase of new casting equipment that will allow it to expand its product line. The up-front cost of the equipment is $750,000. The company expects that the equipment will produce steady income throughout its 10-year life. a. If One Ring requires a 9% return on its investment, what minimum yearly cash inflow will be necessary for the company to go forward with this project? b. How would the minimum yearly cash inflow change if the company required a 12% return on its investment? fine cast silver allow it to expand 0-year life. early cash equired a Basic scenario analysis Murdock Paints is in the process of evaluating two mutually exclusive additions to its processing capacity. The firm's financial analysts have developed pessimistic, most likely, and optimistic estimates of the annual cash inflows associated with each project. These estimates are shown in the following table. Initial Investment (CF0) Outome Pessimistic Most Likely Optimistic Project A Project B ($8,000) ($8,000) Annual Cash Inflow (CF) $200 $900 $1,000 $1,000 $1,800 $1,100 a. Determine the range of annual cash inflows for each of the two projects. b. Assume that the firm's cost of capital is 10% and that both projects have 20-year lives. Construct a table similar to this one for the NPVs for each project. Include the range of NPVs for each project. c. Do parts a and b provide consistent views of the two projects? Explain. d. Which project do you recommend? Why? o mutually ts have developed ve 20-year