Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

NEED ANSWERED ASAP This is ALL the information I was given to solve the problem and the pictures are from the appendix column K and

NEED ANSWERED ASAP

This is ALL the information I was given to solve the problem and the pictures are from the appendix

image text in transcribed

image text in transcribed

image text in transcribed

column "K" and you have more to say, continue on the next line in the first column ("D"). for 5 years = Part 3 Refer to Problem 12-18 (Create - 193-194, Page 413-414) Internal Rate of Return Note: Complete questions band c only (skip question a) Deduct (1) for wrong out of 100. b Note: "Append". = appendix A,B,C,& D, with present and future value tables Step 1 Average inflows (assumed annuity) to arrive at present value factor (equate to Appen D) Year Inflows 1 2 3 4 5 Using Appendix D, Total Look-up closest % Closest Assumed for "assumed" annuity percentage Annuity factor for 1st part of for Assumed Investment Appex D Step 2 below Annuity Only an approx. % Step 2 IRR approximation (use Appendix B for both 20% & 25% "factors") (Next higher % to look up "factors" below) Present Value at the 20% discount rate (as lump sums) Present Value at the 25% discount rate (as lump sums) Year Inflows PV'factor" $ PV Inflows PV"factor" $ PV 1 2 3 4 5 Total Total For an investment of % is too low For an investment of % is too high Step 3 Interpolation to arrive at fraction of percentage above lower rate. 3 PV amt of Range of PV amt of Range % cash flow 1 discount % cash flow cost or Cost 1 @ 2 ! 1 3 Investment Cost 4 Difference 1 Difference 5 5 % Range Higher % Lower % Enter as whole number - 6 Difference Difference Difference plus 2 decimal places 7 7 Fraction of 5%: x ( . 78 Actual IRR 79 fraction of 5% Percentage BO Interhal Rate of Return 20% 31 Questioni Deduct 1-4 for poor or incorrect reason 82 C. 1 Enter the letter Y for accept and N for do not accept. 83 With cost of capital at 10%, should the project be accepted? Why? 84 85 86 1 87 88 1 89 1 90 1 91 92 Sheet1 @ = = 9436 Ready + Di e w P pa 3:20 PM 9/19/2020 b. 8 percent discount rate? What is the internal rate of return? In this problem, would you make the same donininder both parts c. vid b2 18. The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save money. The net cost of this machine is $60,000. The annual cash flows have the following ar projections. re (1 Year 1 O AWN Cash Flow $23,000 26,000 29,000 15,000 8,000 nance Part 4 The Capital Budgeting Process a. C. If the cost of capital is 13 percent, what is the net present value of select- ing a new machine? b. What is the internal rate of return? Should the project be accepted? Why? 19. You are asked to evaluate the following two projects for the Norton Corporation. Using the net present value method combined with the profitabil- ity index approach described in footnote 2 of this chapter, which project would you select? Use a discount rate of 14 percent

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

Recommended Textbook for

Entrepreneurship

Authors: Andrew Zacharakis, William D Bygrave

5th Edition

9781119563099

Students also viewed these Finance questions

Question

How flying airoplane?

Answered: 1 week ago