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LLUR Sensitivity analysis: Boulder Creek Industries Boulder Creek Industries is considering an investment in equipment based on the following estimates Cost of equipment $3,000,000 Residual

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LLUR Sensitivity analysis: Boulder Creek Industries Boulder Creek Industries is considering an investment in equipment based on the following estimates Cost of equipment $3,000,000 Residual value 200,000 Useful life 10 years a. Determine the not present value of the equipment, assuming a desired rate of return of 12 and annual net cash flows of $800,000. Use the present value tablespearing in Exhibit 2 and 5 of this chapter Net present value b. Determine the ret present value of the equipment, assuming & desired rate of return of 12and annual net cash flow of $400,000 $600,000, and $800,000. Use the present value tables (xhibit 2 and 5) provided in the chapter in determining your answer. If required, use the minus sign to indicate a negative net present value Annual Net Cash Flow $400,000 $600,000 $800,000 Net present value c. Determine the net present value of the equipment, assuming a desired rate of return of 15% and annual net cash flow of 5400,000 $600,000, and $800,000. Use the present value tables (Exhibit 2 and 5) provided in the chapter in determining your answer. If required, use the minus sign to indicate a negative net present value Annual Net Cash Flow $400,000 $600,000 $800,000 Net present value d. Determine the minimum annual net cash flow necessary to generate a positive not present value, assuming a desired rate of return of 12%. Round to the nearest dollar. Annual Net Cash Flow Boulder Creek industries wish to invest in an couloment and the protections for the same is as follows Previous Next > Check My Work Emore Check My Work userning c. Boulder Creek industries wish to invest in an equipment and the projections for the same is as follows: Net cash inflow $400,000 5600,000 $800,000 Net present value ($675,600) $454,400 $1.584,400 Based on the above information, when Boulder Creek industries accepts the project? (a) i the net cash flow is $600,000 (b) If the net cash flow is $800,000 (c) If the net cash flow is $400,000 (d) Both $600,000 and $800,000 net cash flow. Boulder Creek industries wish to make a new investment in the equipment. Identify the statement that related to the investment decision (a) The net present value should be positive for the industment, (6) Rate of return and its relationship to the net present value. (c) Net cash inflows out of the investment. (d) All the above

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