I need serious help with these problems. Any assistance will be greatly appreciated!

Practice Set for Chapters 6 and 7 Name__________Sean Ellis_____________ I STRONGLY ENCOURAGE YOU TO REVIEW THE END OF CHAPTER PROBLEMS AND EXCEL SOLUTIONS (ATTACHED TO THE COURSE) BEFORE ATTEMPTING THESE EXERCISES. And I do not resort to \"all caps\" often. Please answer all of the following problems by typing the numerical solution into the space provided beneath each question. 1. Year R S The net present value and internal rate of return desirability measures for two mutually exclusive investments being considered by Stockton Corporation follow. NPV 161 138 IRR 14.60% 15.55% Which investment should be chosen? ________________ 2. Year G H Santa Clara Corporation is considering investments G and H. Initial costs and year-end cash flows follow. The limiting resource that caused the two investments to be mutually exclusive can be reused. The required return is 6.5 percent. 0 5 -150,000 -95,000 60,000 1 2 3 4 45,000 35,000 45,000 25,000 45,000 55,000 80,000 45,000 Net present value for project G_____________ Equivalent annuity for project G_________ Net present value for project H_____________ Equivalent annuity for project H_________ Which investment should be chosen? _______________ 3. An office prints 200,000 pages per year. The Dell brand printers costs $1100 and will produce a total of 600,000 copies before it wears out (3 year life). The Cannon brand machine costs $1,800 and will produce 1,000,000 copies in its 5 year life. Maintenance and material costs are $.05 a page for the Dell machine and $.03 with Cannon machine. The Dell machine has a salvage value of $150 and the Cannon machine will have a salvage value of $225. The required return is 8 percent a year. Which machine should the company acquire? Show numbers and assume year-end cash flows for simplicity. Net present value for Dell copier__$26,870.97___________ Equivalent annuity for Dell copier___$10,426.84_____ Net present value for Cannon copier____$25,756.26________ Equivalent annuity for Cannon copier__$6,450.82_______ Which copier should be chosen? _______Canon________ 4. We can remodel our existing building at a cost of $9.5 million, or build a new building at a cost of $11 million. The old building, after it is refurbished, would not be as efficient as the new one, and energy costs would therefore be $750,000 a year higher. The maintenance cost for the old building would be $450,000 per year and $420,000 for the new building. The salvage value for the new building would be $3.25 million after its 10 year life, while the salvage value for the old building would be $1,800,000 after its 8 year life. In addition, the new building would allow our company to project a \"Green Friendly\" image that would result in better recruitment of clients and personnel. It is estimated that this \"Green Friendly\" image would result in cost savings or increased cash flows (after tax) of $320,000 per year. If the new building is built, the old, the old building can be sold now for $850,000 in its present condition (please read pages 208-209 for the treatment of this cash flow). The required return for Boulder is 7 percent. Net present value for keeping the old building_____________ Equivalent annuity for keeping the old building_________ Net present value for building a new building____________ Equivalent annuity for building a new building_________ Which option should be chosen? _______________ 5. An asset costs $165,000 and will generate cash benefits of $42,000 at the end of each year for six years. Salvage values are $75,000, $50,000, $40,000, $30,000 and $10,000 at the end of years 2, 3, 4, 5 and 6 respectively. The required return is 7 percent. Assuming that this asset can be replicated. Equivalent annuity if abandoned after 6 years ______________ Equivalent annuity if abandoned after 5 years ______________ Equivalent annuity if abandoned after 4 years ______________ Equivalent annuity if abandoned after 3 years ______________ Equivalent annuity if abandoned after 2 years ______________ When is the optimal time to abandon the investment? Problems 6 to 12 A proposed project requiring an initial outlay of $340,000 will provide the following year-end cash flows (remember that the initial outlay and year 3 are negative cash flows) Year Cash Flows 1 6 $140,000 2 3 4 5 $211,000 $-440,000 $195,000 $321,000 $315,000 6. Using a 6% required return, please compute the net present value______________. Is the investment desirable? 7. Using a 6% required return, please compute the profitability index for the above investment__________________. 8. Using a 6% required return, please compute the modified profitability index for the above investment__________________. 9. Please compute the internal rate of return for the above investment __________________. 10. Using a 6% required return, please compute the modified internal rate of return for the above investment (using the method described in the text - not the inappropriately preprogramed MIRR function in excel). _________________ 11. Please compute the payback period for the above investment__________________. 12. Using a 6% required return, please compute the present value payback period for the above investment__________________