Digi Corporation is considering replacing a hand operated machine with a brand new fully automated machine. The company has two types of machine to choose and they are mutually exclusive. The firm's cost of capital is 10%. Below are the expected cash flows generated by both machines? Initial Investment Year 1 Year 2 Year 3 Year 4 Year 5 Calculate the following: Machine AA Machine BB Mesin AA Mesin BB (RM100,000) (RM100,000) RM15,000 RM35,000 RM40,000 RM35,000 RM25,000 RM35,000 RM60,000 RM35,000 RM35,000 RM35,000 a) Payback period for both machines b) Net present value for both machines c) Internal rate of return for Machine BB d) Which machine should the company choose and why? e) What are the benefits of capital budgeting?

Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?

epp Corporation is considering two projects of machinery that perform the same task. The required rate of return for these projects is RM12%. The projects’ expected cash flows are as follows:   Year Machine MIR (RM) Machine ZA (RM) 0 (37,000) (37,000) 1 13,000 16,500 2 15,000 15,500 3 22,000 20,000 4 17,000 19,500        Based on the above information, you are required to make an analysis for the decision of Capital Budgeting based on the following techniques:   1、Payback Period… 2、Discounted Payback Period… 3、Net Present Value (NPV) … 4、Accounting Rate of Return…5、Internal Rate of Return…… 6、Profitability Index, PI……

The Bokawkan company is considering to purchase a new machine. Annual cash returns on investment cost of P1,200,000 is expected to be at P220,000. Useful is estimated at 8 years. The company's cost of capital is 14% and income tax rate is 35%. What is the payback reciprocal of the investment? a. 20.5% b. 18.3% c. 11.9% d. 22.2%

Lofting Snodbury is considering investing in a new boring machine. It costs $ 419,000 and is expected to produce the following cash flows: Year 12345678910 Cash flow ($000s) 64 71 103 108 99 106 106 108 82 64 If the cost of capital is 10%, what is the machine's NPV? Note: Do not round intermediate calculations. Enter your answer in whole dollars rounded to 2 decimal places.

Company XYZ is considering an investment project that is expected to generate the following cash flows: Year 1: $500,000 Year 2: $700,000 Year 3: $800,000 Year 4: $900,000 Year 5: $1,200,000 The cost of capital for the company is 10%. Calculate the Firm's Present Value (FPV) of the cash flows. To calculate the Firm's Present Value (FPV) of the cash flows, you need to discount each cash flow to its present value using the cost of capital, and then sum up the present values of all cash flows.

Salt Lake Potash is considering a project with the following cash flows. An initial investment of $1.025bn is required for the project. The discount rate is 9%. The company wants to calculate how long it would take investors to recover their initial investment. The company does not want to ignore the effects of time value of money and the discount rate. Year O CF ($mn) -$1,025 1.83 years 2.26 years What is your best estimate of the time to recovery? $159.79mn 1 2 $650 $450 19.9% 3 $250 4 $50

Giant Machinery Ltd is considering investing in one of the two following Projects to buy newequipment. Each project will last 5 years and have no salvage value at the end. The company’s requiredrate of return for all investment projects is 9%. The cash flows of the projects are provided below.Project 1 Project 2Cost $175,000 $185,000Future Cash FlowsYear 1Year 2Year 3Year 4Year 576,00083,00067,00065,00055,00087,00078,00069,00065,00057,000Required:a) Identify which project should the company accept based on the NPV method.  (Note: Please round up the result of each calculation of PV to 2 decimal places only for simplification)b) Identify which project should the company accept based on the simple payback method if thepayback criteria is a maximum of 2 years. c) Which project Giant Machinery should choose if two methods are in conflict.

The BMW Company is considering to purchase a new machine.  Annual cash returns on investment cost of P1,200,000 is expected to be at P220,000.  Useful is estimated at 8 years.  The company's cost of capital is 14% and income tax rate is 35%.  What is the payback reciprocal of the investment? A. 20.5% B. 18.3% C. 11.9% D. 22.2%

The Carlo Company has been allocated RM600,000 on investment projects for the coming year. Four projects, each with a four year life and with the following cash flows are currently being considered: Year 0 1 2 3 4 Project RMk RMk RMk RMk RMk A -300 100 10 200 200 В -200 0 400 -100 0 80 80 D -150 60 60 60 60 1. Distinguish between hard and soft capital rationing 2. Assuming that the projects are divisible recommend to the Board, which projects should be accepted using the Net Present Value method and evaluate the total net present value that would be generated 3. Discuss the impact on your analysis of each project being indivisible