NPV Simes Innovations, Inc., is negotiating to purchase exclusive rights to manufacture and market a solar-power toy car. The car's inventor has offered Simes the choice of either a one-time payment of $1,500,000 today or a se of 5 year-end payments of $400,000. a. If Simes has a cost of capital of 9%, which form of payment should it choose? b. What yearly payment would make the two offers identical in value at a cost of capital of 9%? c. What would be your answer to part a of this problem if the yearly payments were made at the beginning of each year? d. The after-tax cash inflows associated with this purchase are projected to amount to $260,000 per year for 15 years. Will this factor change the firm's decision about how to fund the initital investment? a. If Simes has a cost of capital of 9%, the present value of the annuity is $ (Round to the nearest dollar.)

NPV Simes Innovations, Inc., is negotiating to purchase exclusive rights to manufacture and market a solar-power toy car. The car's inventor has offered Simes the choice of either a one-time payment of $1,500,000 today or a se of 5 year-end payments of $400,000. a. If Simes has a cost of capital of 9%, which form of payment should it choose? b. What yearly payment would make the two offers identical in value at a cost of capital of 9%? c. What would be your answer to part a of this problem if the yearly payments were made at the beginning of each year? d. The after-tax cash inflows associated with this purchase are projected to amount to $260,000 per year for 15 years. Will this factor change the firm's decision about how to fund the initital investment? a. If Simes has a cost of capital of 9%, the present value of the annuity is $ (Round to the nearest dollar.)

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5PB: Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated...

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NPV Simes Innovations, Inc., is negotiating to purchase exclusive rights to manufacture and market a solar-powered toy car. The car's inventor has offered Simes the choice of either a one-time payment of $1,700,000 today or a series of 6 year-end payments of $400,000. a. If Simes has a cost of capital of 9%, which form of payment should it choose? b. What yearly payment would make the two offers identical in value at a cost of capital of 9%? c. What would be your answer to part a of this problem if the yearly payments were made at the beginning of each year? d. The cash inflows associated with this purchase are projected to amount to $260,000 per year for 15 years. Will this factor change the firm's decision about how to fund the initital investment? (Round to the nearest dollar.) a. If Simes has a cost of capital of 9%, the present value of the annuity is $ Which form of payment should the firm choose? (Select the best answer below.) O A. Lump sum payment OB. Annuity payment (Round to…
NPV Simes Innovations, Inc., is negotiating to purchase exclusive rights to manufacture and market a solar-powered toy car. The car's inventor has offered Simes the choice of either a one-time payment of $1,800,000 today or a series of 7 year-end payments of $350,000. a. If Simes has a cost of capital of 8%, which form of payment should it choose? b. What yearly payment would make the two offers identical in value at a cost of capital of 8%? c. What would be your answer to part a of this problem if the yearly payments were made at the beginning of each year? d. The after-tax cash inflows associated with this purchase are projected to amount to $227,500 per year for 15 years. Will this factor change the firm's decision about how to fund the initital investment? a. If Simes has a cost of capital of 8%, the present value of the annuity is $. (Round to the nearest dollar.) Which form of payment should the firm choose? (Select the best answer below.) O A. Lump sum payment B. Annuity payment…
Silver Corporation is negotiating to purchase rights to manufacture and market a solar-powered toy car. The car’s inventor has offered Silver the choice of either a one-time payment of $1,500,000 today or a series of five year-end payments of $385,000. a.If Silver has a cost of capital of 9%, which form of payment should it choose? b.What yearly payment would make the two offers identical in value at a cost of capital of 9%? c.Would your answer to part a of this problem be different if the yearly payments were made at the beginning of each year? Show what difference, if any, that change in timing would make to the present value calculation.
Simes Innovations, Inc., is negotiating to purchase exclusive rights to manufacture and market a solar-powered toy car. The car's inventor has offered Simes the choice of either a one-time payment of $1,700,000 today or a series of 6 year-end payments of $400,000. a. If Simes has a cost of capital of 13%, which form of payment should it choose? b. What yearly payment would make the two offers identical in value at a cost of capital of 13%? c. What would be your answer to part a of this problem if the yearly payments were made at the beginning of each year? d. The after-tax cash inflows associated with this purchase are projected to amount to $260,000 per year for 15 years. Will this factor change the firm's decision about how to fund the initital investment?
(Evaluation of Purchase Options) Sosa Excavating Inc. is purchasing a bulldozer. The equipment has a price of $100,000. The manufacturer has offered a payment plan that would allow Sosa to make 10 equal annual payments of $16,274.53, with the first payment due one year after the purchase.Instructions(a) How much total interest will Sosa pay on this payment plan?(b) Sosa could borrow $100,000 from its bank to finance the purchase at an annual rate of 9%. Should Sosa borrow from the bank or use the manufacturer’s payment plan to pay for the equipment?
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I request to you d,nt use excel to solve.only typed answer gives. Q)A construction company has an option to purchase a certain machine for $60,000 at any time between Now and 6 years from now. If the company plans to purchase the machine 6 years from now , the equivalent present amount that the company is paying for the machine at 10 % per year interest is closest to
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