PLEASE CALCULATE YELLOW PARTS
a. Option Net Present Value Discount Rate Number of Periods Income Future Value 1 17.00% 1 871,000 1,356,000 2 12.70%% 48 481,000 816,000 3 11.00%6 8 Initial Investment Net Present Value 485,000 $744,444.44 335,000 520,000 b. Option NPV with EUL 1 2 3 1. Net Present Value Assume your company has decided invest in new equipment to further increase profits. Compute the NPVs of the following investments independently. There is a high risk, high reward investment opportunity avalible to your company. The potential return is $1,356,000 after 4 years for an initial investment of $485,000. Due to the high risk involved, your company has assiged a discount rate of 17%. 2. Your company can invest in a production 3D printer for $335,000 with a useful life of 4 years, and a salvage value of $46,000. The 3D printer makes $17,000 worth of product monthly Your company has assigned a discount rate of 12.7% to this cost of capital and the risk involved. 3. An initial investment of $520,000 will return $169,000 per year for 8 years. Your company has assigned a discount rate of 11% to this project based on its cost of capital and the level of risk involved in the investment. b. Compute the NPV's for the projects with equivalent useful lives (EUL). NOTE: When using NPV, the function's cash flow starts at time 1 soyou have to subtract your intia invesment after finding PV of cashflows a. Option Net Present Value Discount Rate Number of Periods Income Future Value 1 17.00% 1 871,000 1,356,000 2 12.70%% 48 481,000 816,000 3 11.00%6 8 Initial Investment Net Present Value 485,000 $744,444.44 335,000 520,000 b. Option NPV with EUL 1 2 3 1. Net Present Value Assume your company has decided invest in new equipment to further increase profits. Compute the NPVs of the following investments independently. There is a high risk, high reward investment opportunity avalible to your company. The potential return is $1,356,000 after 4 years for an initial investment of $485,000. Due to the high risk involved, your company has assiged a discount rate of 17%. 2. Your company can invest in a production 3D printer for $335,000 with a useful life of 4 years, and a salvage value of $46,000. The 3D printer makes $17,000 worth of product monthly Your company has assigned a discount rate of 12.7% to this cost of capital and the risk involved. 3. An initial investment of $520,000 will return $169,000 per year for 8 years. Your company has assigned a discount rate of 11% to this project based on its cost of capital and the level of risk involved in the investment. b. Compute the NPV's for the projects with equivalent useful lives (EUL). NOTE: When using NPV, the function's cash flow starts at time 1 soyou have to subtract your intia invesment after finding PV of cashflows
