Q: Why future value is important to calculate?
A: Future value is the value of what a certain asset/cash/instrument will be worth at a future…
Q: What is the Future Value?
A: Future Value: It represents the future worth of the present amount and can be estimated by the…
Q: present worth of this investment.
A: We can populate the cash flows as below and calculate the NPW. Pls note that 24% compounded monthly…
Q: What is a satisfiable investment? When the present value of benefits surpasses the cost of an…
A: This question explains about the present value of benefits surpasses and the cost of an investment…
Q: the future value
A: Introduction: Ordinary annuity is an annuity in which the payments are made at the end of a…
Q: ORTH METHO
A: Annual Worth is uniformly equivalent AW of all estimated income and costs during the lifetime of a…
Q: Write the various applications that call for annual-worth analysis techniques?
A: Annual worth analysis is the analysis which is done by the managers before taking capital budgeting…
Q: Evaluate the two alternatives A and B and decide the economic justified alternative using: Present…
A: Comment- Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the…
Q: Define the term Risk-free real return?
A: Risk-free real return is a hypothetical number that mirrors the foreseen return on a venture that…
Q: Define the term future value.
A: Future value (FV) is the value of a current asset at a future date based on an assumed rate of…
Q: Find the future value.
A: Time value of money is one of the most fundamental and basic concepts of investing. The phrase “Time…
Q: What is the present value index for Project A?
A: Present Value Index: It represents the ratio of the project's net present value to the initial cost…
Q: Compute the FW (future worth) of The Lancelot. Remember to include your calculations in your…
A: Let us first compute the annual cash flows for The Lancelot.
Q: Find the future value
A: Future value = Present value(1 + Rate)^Time where, Rate = 0.03 / 2 = 0.015 or 1.5% Time = 5 * 2 =…
Q: What is the equivalent total investment cost (future worth)?
A: Answer: Equivalent total investment cost (future worth) method discounted cash flow method converts…
Q: What are some possible financial decisions in which using the Present Value (PV) formula might be…
A: The present value (PV) is the current value provided a defined rate of return of a future amount of…
Q: What are the best short-term and long-term investment strategies going forward into the future?
A: Short term investment strategy – Those investment that are usually traded for upto a span of 3 years…
Q: What is annual worth method, future worth method, and present worth method in comparing alternative,…
A: There are various alternatives for a project or investments that can be undertaken or chosen by the…
Q: What is the relationship between present value and future value?
A: Future Value : FV is that value which will be received in near future. Present Value : PV is that…
Q: Suppose you know that an investment will earna positive return in the future. Why is it important to…
A: The investment may provide a positive return in the future, but the worth of receiving it in future…
Q: Which alternative offers you the highest effective rate of return?
A: Investment appraisal is the method of evaluating and selecting investments from various investment…
Q: Give an example of the Present Value of Perpetuities?
A: Perpetuity is a continuous annuity, a progression of equivalent interminable cash flows happening…
Q: What is future value, FV?
A: Future Value: The future value is the value of the present amount compounded at an interest rate…
Q: Briefly explain the following; a. present value of money. b. future value of money.
A: a) Present value of money Answer: The present value is nothing but the actual value of the future…
Q: How can we make the equivalence calculations of future worth?
A: Future value is the value of the current or the present amount at future specified time for the…
Q: Explain the net present value formula and also explain what the net present value represents.
A: Net present value:- Net present value is the investment evaluation technique, where we evaluate…
Q: present worth analysis, whic
A: Introduction: Present worth analysis is defined as analysis in which the cash flows of the project…
Q: Which Alternative - if any, Should be selected based upon a present worth analysis?
A: NPV means Net Present Value. "NPV is the differentiation between net cash inflow and net cash…
Q: choose the best alternative A or B using net present worth method ?
A: The net present value is one of the modern methods used for evaluating the feasibility of a…
Q: Which alternative should be selected? Use a challenger-defender rate of return analysis.
A: Given, Particulars Projects A($) B($) C($) D($) Initial investment 8500 18500 26500 30000…
Q: compare Future Value and Present Value?
A: The comparison between present value and future value is as follows:
Q: Explain an example how to determine the future value.
A:
Q: What ne future value
A: This is a question relating to time value of money. Present value and future balue calculations are…
Q: e value?
A: Future value refers to the concept of comparing the expected outcome of a project or asset in the…
Q: Can we consider Project Risk by Discount Rate?
A: The discount rate is an interest rate that is used in computing the present value of the future cash…
Q: Describe the method of developing a Present Worth Distribution?
A: Present value or Present Worth of an investment or a project is the value of future cash flow…
Q: How can we consider the Future Worth and Project Balance?
A: The question is based on the concept of evaluation of long term investment, future worth and project…
Q: Describe the process of Calculating Present Worth?
A: Step-1: The initial invested amount should be ascertained and the initial investment is the sum…
Q: Determine the present worth of the series. Determine the future worth
A: Present Value = Cash Flow(1+i)n Future Value = Cash Flow x (1+i)n where, i= Interest rate n= period
Q: Find the present value of the given future amount.
A: Present Value: It represents the present value of the future sum of the amount. It is computed by…
Q: Define Present value and future value. If present value and future value are equal what is the rate?…
A: The time value of money is an important concept in finance which states that the money a person…
Q: Present Value versus Future Value
A: Present value is the amount at time "t=0". This is the value of an investment today or in present…
Q: As you increase the length of time involved, what happens to future values? What happens to present…
A: Time value of money refers that money received now has higher worth in comparison with money…
Q: Discuss and critically evaluate the relationship between risk and return. Discuss and critically…
A: Risk is measured by variability in returns.Higher the variability higher the risks under the…
Q: Define the term Net Future Worth and draw a Project Balance Diagram?
A: Time value of money refers to the worth of the amount received today is more than the worth of the…
Q: Explain Net Future Worth and Project Balance Diagram?
A: Net future worth is future value of the current assets at some future specific date, it is…
Q: What reinvestment rate is built into the NPV calculation? The IRR calculation?
A: Capital budgeting is a method of investment appraisal. It is a method used for finding the…
Q: How is a future worth yield?
A: Future worth yield is equals to future return on a particular amount. Future value is the value of…
Q: FUTURE VALUE FORMULA Please provide the formula for finding the Future Value of Money.
A: Future value: Dollar earned today is more valuable than dollar earned tomorrow. Value of an asset at…
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- Friedman Company is considering installing a new IT system. The cost of the new system is estimated to be 2,250,000, but it would produce after-tax savings of 450,000 per year in labor costs. The estimated life of the new system is 10 years, with no salvage value expected. Intrigued by the possibility of saving 450,000 per year and having a more reliable information system, the president of Friedman has asked for an analysis of the projects economic viability. All capital projects are required to earn at least the firms cost of capital, which is 12 percent. Required: 1. Calculate the projects internal rate of return. Should the company acquire the new IT system? 2. Suppose that savings are less than claimed. Calculate the minimum annual cash savings that must be realized for the project to earn a rate equal to the firms cost of capital. Comment on the safety margin that exists, if any. 3. Suppose that the life of the IT system is overestimated by two years. Repeat Requirements 1 and 2 under this assumption. Comment on the usefulness of this information.Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6 years, and an estimated salvage value of 800. The replacement machine is eligible for 100% bonus depreciation at the time of purchase- The replacement machine would permit an output expansion, so sales would rise by 1,000 per year; even so, the new machines much greater efficiency would cause operating expenses to decline by 1,500 per year The new machine would require that inventories be increased by 2,000, but accounts payable would simultaneously increase by 500. Dautens marginal federal-plus-state tax rate is 25%, and its WACC is 11%. Should it replace the old machine?Cori's Meats is looking at a new sausage system with an installed cost of $505,000. This cost will be depreciated straight-line to zero over the project's five-year life, at the end of which the sausage system can be scrapped for $75,000. The sausage system will save the firm $185,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $34,000. If the tax rate is 25 percent and the discount rate is 8 percent, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV $ 553,988.52
- Consider the following financial information about a retooling project at a computer manufacturing company: The project costs $2 million and has a five-year service life. The project can be classified as a seven-year property under the MACRS rule. At the end of the fifth year, any assets held for the project will be sold. The expected salvage value will be about 10% of the initial project cost. The firm will finance 40% of the project money from an outside financial institution at an interest rate of 10%. The firm is required to repay the loan with five equal annual payments. The firm's incremental (marginal) tax rate on this investment is 35%. The firm's MARR is 18%.Use this financial information to complete the following tasks:(a) Determine the after-tax cash flows.(b) Compute the annual equivalent cost for this project.Cori's Meats is looking at a new sausage system with an installed cost of$304,000. This cost will be depreciated straight-line to zero over the project's five-year life, at theend of which the sausage system can be scrapped for $30,000. The sausage system will save the firm$116,000 per year in pretax operating costs and the system requires an initial investment in net workingcapital of $15,000. If the tax rate is 23 percent and the discount rate is 10 percent, what is the NPV ofthis project? Security F has an expected return of 11 percent and a standarddeviation of 47 percent per year. Security G has an expected return of 14 percent and a standarddeviation of 63 percent per year.a. What is the expected return on a portfolio composed of 65 percent of Security F and 35 percent ofSecurity G?b. If the correlation between the returns of Security F and Security G is. 15, what is the standarddeviation of the portfolio described in part (a)? One potential criticism of the internal rate of…Kappa Holdings is looking at a new system with an installed cost of $705,000. This cost will be depreciated straight-line to zero over the project's 6-year life, at the end of which the system can be salvaged for $95,000. The system will save the firm $203,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $55,000, which will be returned at the end of the project. If the tax rate is 25 percent and the discount rate is 10 percent, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV
- The ABC Ltd is analysing the costs and benefits of setting up an extra fast-food outlet in Adelaide. The predicted costs and income flows are provided below: $2 million site acquisition and development costs. The capital depreciation expense is $50,000 per year. Investment in plant and equipment of $600,000. The plant and equipment have an estimated useful life of 5 years and the residual value would be zero. The plant and equipment will be depreciated on a straight-line basis for tax purposes. The forecasted sales in year 1 is $600,000 and $800,000 per year thereafter. Labour and material costs are equivalent to 50 per cent of incremental sales. The policy (objective) is to sell the outlet at the end of year 3. The estimated selling price is $3.5 million. Sales in a similar outlet of ABC Ltd will decline by $80,000 per year due to loss of customers and experienced staff to the new venture. Other operating costs are about $150,000 per year (fixed) The net working capital requirement at…EKH, Inc. is considering the purchase of a machine that would cost $400,000 and would last for 6 years,at the end of which, the machine would have a salvage value of $47,000. The machine would reducelabor and other costs by $109,000 per year. Additional working capital of $4,000 would be neededimmediately, all of which would be recovered at the end of 6 years. The company requires a minimumpretax return of 17% on all investment projects.Required :Determine the net present value of the projectFrank’s Franks is looking at a new sausage system with an installed cost of $397,800.This cost will be depreciated straight-line to zero over the project's 7-year life, at the endof which the sausage system can be scrapped for $61,200. The sausage system will savethe firm $122,400 per year in pretax operating costs, and the system requires an initialinvestment in net working capital of $28,560. All of the net working capital will berecovered at the end of the project. The tax rate is 33 percent and the discount rate is 9percent. What is the net present value of this project?
- Wettway Sailboat Corporation is considering whether to launch its new Margo-class sailboat. The selling price will be $48,000 per boat. The variable costs will be about half that, or $27,000 per boat, and fixed costs will be $535,000 per year. The total investment needed to undertake the project is $3,800,000. This amount will be depreciated straight-line to zero over the 6-year life of the equipment. The salvage value is zero, and there are no working capital consequences. Wettway has a required return of 18 percent on new projects. FC+ OCF-TCXD 1-TC Q== P-v Use the above expression to find the cash, accounting, and financial break-even points for Wettway Sailboat. Assume a tax rate of 23 percent. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Cash break-even Accounting break-even Financial break-even 25.47 55.63 83.50Wettway Sailboat Corporation is considering whether to launch Its new Margo-class sallboat. The selling price will be $54,000 per boat. The variable costs will be about half that, or $33,000 per boat, and fixed costs will be $595,000 per year. The total Investment needed to undertake the project is $4,400,000. This amount will be depreciated straight-line to zero over the 6-year life of the equipment. The salvage value Is zero, and there are no working capital consequences. Wettway has a required return of 15 percent on new projects. FC + OCF-TOXD 1-TC P-U Use the above pression to find the cash, accounting, and financial break-even points for Wettway Sailboat. Assume a tax rate of 24 percent. (Do not round Intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Cash break-even Accounting break-even Financial break-even 63.25 90.15Wettway Sailboat Corporation is considering whether to launch its new Margo-class sailboat. The selling price will be $41,000 per boat. The variable costs will be about half that, or $20,000 per boat, and fixed costs will be $465,000 per year. The total investment needed to undertake the project is $3,100,000. This amount will be depreciated straight-line to zero over the 5-year life of the equipment. The salvage value is zero, and there are no working capital consequences. Wettway has a required return of 11 percent on new projects. FC + OCF-TCX D 1-TC P-v Use the above expression to find the cash, accounting, and financial break-even points for Wettway Sailboat. Assume a tax rate of 21 percent. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Cash break-even Accounting break-even Financial break-even