Use Exhibit 128,1 and Exhibit 128.2 to locate the present value of an annulty of $1, which is the amount to be multiplied times the future aninuat cash flow amount. Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a. Zampbell Manufacturing is considering the purchase of a new wolding system. The cash benefits will be $480,000 per yeat. The system costs $2,450,000 and will last 10 years. b. Evee Cardenas is interested in investing in a women's specialty shop. The cost of the investment is $330,000. 5 he estimates that the return from owning her own shop will be $40,000 per year. She estimates that the shop will have a useful ufe of 6 years. c. Barker Company calculated the NPV of a project and found it to be $63,900. The project's life was estimated to be 8 years, The required rate of return used for the NPV calculation was 10%. The project was expected to produce annual after-tax cash flows of $135,000. Required: 1. Compute the NPV for Campbell Manufacturing, assuming a discount rate of 12%. If required, round all present value calculations to the nearest dollae. Use the minus sign to indicate a negative NPV. Should the company buy the new weiding system? 2. Conceptual Connection: Assuming a required rate of return of 8%, calculate the NPV for Evee Cardenas' investment. Round to the nearest dollar. If required, round all present value calculations to the nearest dollar. Use the minus sign to indicate a negative NPV. Should she invest? What if the estimated return was $135,000 per year? Calculate the new NPV for Evee Cardenas' investment, Would this affect the decision? What does this tell you about your analysts? Round to the nearest dollar. The shop should now y be purchased. This reveals that the decision to accept or relect in this case is affected by differences in estimated cash flow Each of the following scenarios is independent. Assume that all cash flows are ofter-tax cash flows. a. Campbell Manufacturing is considering the purchase of a new welding system. The cash benefits will be $480,000 per year. The system costs 52,450,000 and will last 10 years. b. Evee Cardenas is interested in investing in a women's specialty shop. The cost of the investment is $330,000.5 She estimates that the return from owning her own shop will be $40,000 per year. She estimates that the shop will have a useful life of 6 years. c. Barker Company calculated the NPV of a project and found it to be $63,900. The project's life was estirnated to be 8 years. The required rate of return ised for the NPV calculation was 10%. The project was expected to produce annual after-tax cash flows of $135,000. Required: 1. Compute the NPV for Campbeli Manufacturing, assuming a discount rate of 12%. If requilred, round all present value calculations to the nearest dotiar, Use the minus sign to indicate a negative NPV. Should the company buy the new welding system? 2. Conceptual Connection: Assuming a required rate of return of 8%, calculate the Npy for Evee Cardenas' investment. Round to the nearest dollat If required, round all present value calculations to the nearest dollar, Use the minus sign to indicate a negative Niv. Should she invest? What if the estimated return was $135,000 per year? Calculate the new NPV for Evee Cardenas' investment, Would this affect the decision? What does this tell you about your analysis? Round to the nearest dollar. The shop be purchased. This reveals that the decision to accept or reject in this case is affected by differences in estimated 3. What was the required investment for Barker Company's project? Round to the nearest dollar. If required, round all present value calculabions to the nearest doliar, Follow the format shown in Exhibit 128.1 and Exhibit 128.2 as you complete the requirements below. Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a. Cuenca Company is considering the purchase of new equipment that wilf speed up the process for producing flash drives. The equibment will cort s7,200.000 and have a life of 5 years with no expected salvage value. The expected cash flows associated with the project follow: b. Kathy Shorts is evaluating an investment in an information system that will save $240,000 per year, She estimates that the system will last 10 years, The system Will cost $1,248,000. Her company's cost of capital is 10%. c. Elmo Enterprises just announced that a new plant would be built in Helper, Utah. Elmo told its stockholders that the plant has an expected ife of 15 years and an expected IRR equal to 25%. The cost of building the plant is expected to be $2,880,000. Required: 1. Calculate the IRR for Cuenca Company. The company's cost of capital is 16%. Round your answer to the nearest percent. Should the new equipment be purchased? 2. Calculate Kathy Short's IRR. Round your answer to the nearest percent. should she acouire the new system? a. Cuenca Company is considering the purchase of new equipment that will speed up the process for producing fiash drives. The equipment will cost s7,200,000 and have a llfe of 5 years with no expected salvage value. The expected cash flows associated with the project follow: b. Kathy Shorts is evaluating an investment in an information system that will save $240,000 per year. She estimates that the system will last 10 years. The system will cost $1,248,000. Her company's cost of capital is 10%. c. Elmo Enterprises just announced that a new plant would be built in Helper, Utah. Elmo told its stockholders that the plant has an expected life of 15 years and an expected IRR equal to 25%. The cost of bulliding the piant is expected to be $2,880,000. Required: 1. Colculate the IRR for Cuenca Company. The company's cost of capital is 16%. Round your answer to the nearest percent. \%o Should the new equipment be purchased? 2. Calculate Kathy Short's IRR. Round your answer to the nearest percent, 46 Should she acquire the new system? 3. What should be Elmo Enterprises' expected annual cash flow from the plant? Round your answer to the nearest dollar. Net Present Value and Competing Projects For discount factors use Exhibit 128.1 and Exhibit 12B.2. Spiro Hospital is investigating the possibility of investing in new dialysis equipment. Two local manufacturers of this equipment are being considered as sources of the equipment. After-tax cash inflows for the two competing projects are as follows: Both projects require an initial investment of $560,000. In both cases, assume that the equipment has a life of 5 years with no salvage value. Required: Round present value calculations and your final answers to the nearest dollar. 1. Assuming a discount rate of 10%, compute the net present value of each plece of equipment. 2. A third option has surfaced for equipment purchased from an out-of-state supplier. The cost is also $560,000, but this equipment will produce even cash flows over its 5 -year life. What must the annual cash flow be for this equipment to be selected over the other two? Assame a 10% discount rate. per year Use Exhibit 128,1 and Exhibit 128.2 to locate the present value of an annulty of $1, which is the amount to be multiplied times the future aninuat cash flow amount. Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a. Zampbell Manufacturing is considering the purchase of a new wolding system. The cash benefits will be $480,000 per yeat. The system costs $2,450,000 and will last 10 years. b. Evee Cardenas is interested in investing in a women's specialty shop. The cost of the investment is $330,000. 5 he estimates that the return from owning her own shop will be $40,000 per year. She estimates that the shop will have a useful ufe of 6 years. c. Barker Company calculated the NPV of a project and found it to be $63,900. The project's life was estimated to be 8 years, The required rate of return used for the NPV calculation was 10%. The project was expected to produce annual after-tax cash flows of $135,000. Required: 1. Compute the NPV for Campbell Manufacturing, assuming a discount rate of 12%. If required, round all present value calculations to the nearest dollae. Use the minus sign to indicate a negative NPV. Should the company buy the new weiding system? 2. Conceptual Connection: Assuming a required rate of return of 8%, calculate the NPV for Evee Cardenas' investment. Round to the nearest dollar. If required, round all present value calculations to the nearest dollar. Use the minus sign to indicate a negative NPV. Should she invest? What if the estimated return was $135,000 per year? Calculate the new NPV for Evee Cardenas' investment, Would this affect the decision? What does this tell you about your analysts? Round to the nearest dollar. The shop should now y be purchased. This reveals that the decision to accept or relect in this case is affected by differences in estimated cash flow Each of the following scenarios is independent. Assume that all cash flows are ofter-tax cash flows. a. Campbell Manufacturing is considering the purchase of a new welding system. The cash benefits will be $480,000 per year. The system costs 52,450,000 and will last 10 years. b. Evee Cardenas is interested in investing in a women's specialty shop. The cost of the investment is $330,000.5 She estimates that the return from owning her own shop will be $40,000 per year. She estimates that the shop will have a useful life of 6 years. c. Barker Company calculated the NPV of a project and found it to be $63,900. The project's life was estirnated to be 8 years. The required rate of return ised for the NPV calculation was 10%. The project was expected to produce annual after-tax cash flows of $135,000. Required: 1. Compute the NPV for Campbeli Manufacturing, assuming a discount rate of 12%. If requilred, round all present value calculations to the nearest dotiar, Use the minus sign to indicate a negative NPV. Should the company buy the new welding system? 2. Conceptual Connection: Assuming a required rate of return of 8%, calculate the Npy for Evee Cardenas' investment. Round to the nearest dollat If required, round all present value calculations to the nearest dollar, Use the minus sign to indicate a negative Niv. Should she invest? What if the estimated return was $135,000 per year? Calculate the new NPV for Evee Cardenas' investment, Would this affect the decision? What does this tell you about your analysis? Round to the nearest dollar. The shop be purchased. This reveals that the decision to accept or reject in this case is affected by differences in estimated 3. What was the required investment for Barker Company's project? Round to the nearest dollar. If required, round all present value calculabions to the nearest doliar, Follow the format shown in Exhibit 128.1 and Exhibit 128.2 as you complete the requirements below. Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a. Cuenca Company is considering the purchase of new equipment that wilf speed up the process for producing flash drives. The equibment will cort s7,200.000 and have a life of 5 years with no expected salvage value. The expected cash flows associated with the project follow: b. Kathy Shorts is evaluating an investment in an information system that will save $240,000 per year, She estimates that the system will last 10 years, The system Will cost $1,248,000. Her company's cost of capital is 10%. c. Elmo Enterprises just announced that a new plant would be built in Helper, Utah. Elmo told its stockholders that the plant has an expected ife of 15 years and an expected IRR equal to 25%. The cost of building the plant is expected to be $2,880,000. Required: 1. Calculate the IRR for Cuenca Company. The company's cost of capital is 16%. Round your answer to the nearest percent. Should the new equipment be purchased? 2. Calculate Kathy Short's IRR. Round your answer to the nearest percent. should she acouire the new system? a. Cuenca Company is considering the purchase of new equipment that will speed up the process for producing fiash drives. The equipment will cost s7,200,000 and have a llfe of 5 years with no expected salvage value. The expected cash flows associated with the project follow: b. Kathy Shorts is evaluating an investment in an information system that will save $240,000 per year. She estimates that the system will last 10 years. The system will cost $1,248,000. Her company's cost of capital is 10%. c. Elmo Enterprises just announced that a new plant would be built in Helper, Utah. Elmo told its stockholders that the plant has an expected life of 15 years and an expected IRR equal to 25%. The cost of bulliding the piant is expected to be $2,880,000. Required: 1. Colculate the IRR for Cuenca Company. The company's cost of capital is 16%. Round your answer to the nearest percent. \%o Should the new equipment be purchased? 2. Calculate Kathy Short's IRR. Round your answer to the nearest percent, 46 Should she acquire the new system? 3. What should be Elmo Enterprises' expected annual cash flow from the plant? Round your answer to the nearest dollar. Net Present Value and Competing Projects For discount factors use Exhibit 128.1 and Exhibit 12B.2. Spiro Hospital is investigating the possibility of investing in new dialysis equipment. Two local manufacturers of this equipment are being considered as sources of the equipment. After-tax cash inflows for the two competing projects are as follows: Both projects require an initial investment of $560,000. In both cases, assume that the equipment has a life of 5 years with no salvage value. Required: Round present value calculations and your final answers to the nearest dollar. 1. Assuming a discount rate of 10%, compute the net present value of each plece of equipment. 2. A third option has surfaced for equipment purchased from an out-of-state supplier. The cost is also $560,000, but this equipment will produce even cash flows over its 5 -year life. What must the annual cash flow be for this equipment to be selected over the other two? Assame a 10% discount rate. per year