Your firm has the opportunity to repurpose one of its facilities and use it to invest in a new product that would change the profits of your firm for the next four years as follows: Year Before After 1 9.5 2 8 11 3 12.5 4. The facility is currently being used to produce another product, which is scheduled to be decommi
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- Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 8%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?Assume that an industrial building can be purchased for $1,500,000 today, is expected to yield cash flows of $80,000 for each of the next five years (with the cash flows occurring at the end of each year), and can be sold at the end of the fifth year for $1,900,000. Calculate the internal rate of return (IRR) for this transaction. 6.78% O 10.37% O 9.73% O 344%Ivanhoe, Inc., management is expecting a new project to start paying off beginning at the end of next year. Cash flows are expected to be as follows: 8.00% $432676 $473452 Future value Present value $ 2 If Ivanhoe can reinvest these cash flows to earn a return of 8.00 percent, what is the future value of this cash flow stream at the end of 5 years? What is its present value? (Round answers to 2 decimal places, e.g. 52.75. Do not round factor values.) LA $ 5 Year $484455 $486326 $544444
- It is estimated that a certain piece of equipment can save as $25,000 per year in labour and materials. The equipment has an expected life of six years and no market value. If the company must earn a 20% annual return on such investments, select the appropriate cash flow diagram that represents this transaction. O A. O B. P= ? A = $25,000 P= ? A= $25,000 1 2 3 4 End of Year 5 6 2 3 4 End of Year Oc. O D. A= $25,000 A = $25,000 ! 3 End of Year 5 6 1 2. 3 6 End of Year P=? P=? Lütfen birini seçin: O A. C О В. В O C. A O D. DSalalah Foods is getting ready to produce a new line of products by investing 185000 OMR. The investment will result in additional cash flows of 52500 OMR , 81250, and 120000 over the next three years. What is the payback period for this project? Select one: a. 1.84 years b. 2.62 years c. None of these d. 1.53 years e. 2.42 years The market which deals with long term financial assets Select one: a. All the options b. Primary Market c. Secondary Market d. Capital Market"It is estimated that a certain piece of equipment can save $22145 per year in labor and materials costs. The equipment has an expected life of 6 years and no market value. If the company must earn a 15.96% annual return on such investments, how much could be justified now for the purchase of this piece of equipment? Draw a cash-flow diagram from the company s viewpoint." A 62425.06 B 81685.01 170143.66 D 184740.67 E 61075.73
- The Horizon Company will Invest $84,000 in a temporary project that will generate the following cash inflows for the next three years. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year Cash Flow $22,000 34,000 58,000 7 3 The firm will also be required to spend $10,000 to close down the project at the end of the three years. a. Compute the net present value if the cost of capital is 8 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.) Net present value b. Should the investment be undertaken? Ⓒ Yes O NoYou are considering investing RM61000 in new equipment. You estimate that the net cash flows will be RM11000 during the first year, but will increase by RM2500 per year the next year and each year thereafter. The equipment is estimated to have a 8-year service life and a net salvage value of RM4800 at that time. Assume MARR of 9%. a.Calculate the annual capital cost CR (ownership cost) for the equipment. Format: 60287 b.Determine the equivalent annual revenue. Format: 77548 c.Is this a wise investment? Y/N. Format: AYou are evaluating purchasing the rights to a project that will generate after tax expected operating cash flows of $91k at the end of each of the next five years, plus an additional $1,000k non-operating terminal period cash flow at the end of the fifth year. You can purchase this project for $531k. If your firm's cost of capital (aka required rate of return) is 14.3%, what is the NPV of this project? Note: All dollar values are given in units of $1k = $1000. Provide your answer in units of $1000, thus, $15000 = 15k and thus you should enter 15 for your answer.
- DON Corporation is contemplating the purchase of a machine that will produce net after-tax cash savings of $22.000 per year for 5 years. At the end of five years, the machine can be sold to realize after-tax cash flows of $5,300 Assuming a 9% discount rate, calculate the total present value of the annual cash savings and the salvage value of the machine (EV of 51, PV of 51. EVA of S1, and PVA of 5) (Use appropriate factor(s) from the tables provided. Round final answer to the nearest whole dollar) Total presentanYou own building V and building S. The next cash flow for each building is expected in 1 year. Building V has a cost of capital of 17.20 percent and is expected to produce annual cash flows of $369,045.00 forever. Building S is worth $6,214,435.00 and is expected to produce annual cash flows of $169,044.00 forever. Which assertion is true? O Building V is more valuable than building S and building V is more risky than building S Building S is more valuable than building V and building S is more risky than building V O Building V is more valuable than building S and building S is more risky than building V O Building S is more valuable than building V and building V is more risky than building S Building V and building S either have the same value, the same level of risk, or both the same value and level of risk. لاYour company has been presented with an opportunity to invest in a project. The facts on the project are presented below: The project is expected to operate as shown for ten years. If management expects to make 15% on its investments before taxes, would you recommend this project? Solve the Problem using Present Worth Method. show your solution