PLEASE PROVIDE EXCEL SOLTIONConsider the following EOY cash flows for two mutually exclusive types of microscope for a geoscience lab (one must bechosen, assume that annual benefits of both types are similar). The MARR is 5% per year.Microscope A Microscope BCapital investmentAnnual expensesUseful lifeMarket value at end of useful life$60,000$85,000$1,400$1,50018 years$12,00012 years$0a. Determine which alternative should be selected if the repeatability assumption applies.b. Determine which alternative should be selected if the analysis period is 18 years, the repeatability assumption does notapply, and a microscope can be leased (i.e. borrowed) for $10,000 per year after the useful life of either microscope isover.

Annual worth is calculated over one life cycle of the asset and is usually used to compare the…

Answered: Consider the following EOY cash flows…

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 17E

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1/. The company ABC is considering two mutually exclusive investment programs which have a lifetime of two years. The cash flows of the two programs (in thousands of euros), as well as the corresponding probabilities of their realization are presented in the following tables: Year 0 Year 1 Cost Probability Cash Flow -400 Year 0 40% -700 60% Cost Probability Cash Flow 35% Year 1 65% TOPIC 1st INVESTMENT A 440 380 INVESTMENT B 480 Year 2 Potential Cash Flow 60% 40% 70% 30% 340 Chance Year 2 40% 60% 55% 45% 460 420 410 360 Cash Flow 490 480 380 330 AV. Consider, based on the criterion of Expected Net Present Value, which of the two investments would you choose, given that the weighted average cost of capital in the case of Investment A is estimated at 10%, Investment B at 8%, while the risk-free rate is 3%. B/. Let's say at the end of the first year a prospective buyer comes along and makes an offer to buy the investment you chose to implement in question a/. According to his offer, he…
Project x... Useful life 9years Initial cost : 286000 Annual revenues : 125000 Annual O&M cost: 73000 Salvage value:28600 Project Y Useful life 18years Initial cost: 184000 Annual revenues: 107000 Annual O&M cost:68000 Upgrade cost at the Th7 year :69000 Q1: Draw cash flow of the two projects and recommend one of the projects using Annual Worth method using i:6%.
Investment required Present value of cash inflows - Net present value Life of the project. Internal rate of return 1 Required 1 $ (270,000) 336,140 $ 66,140 Project 6 years 18% Complete this question by entering your answers in the tabs below. Required 2 Compute the profitability index for each investment project. Note: Round your answers to 2 decimal places. Profitability Index 2 $ (450,000) 522,970 $ 72,970 Project Number 3 years 19% The net present values above have been computed using a 10% discount rate. Limited funds are available for investment, so the company can't accept all of the available projects. Required: 1. Compute the profitability index for each investment project. 2. Rank the four projects according to preference, in terms of net present value, profitability index, and internal rate of return. 3 $ (360,000) 433,400 $ 73,400 12 years. 14 $ (480,000) 567,270 $ 87,270 6 years 16%
TOPIC: ANNUITIES INSTRUCTION: SHOW COMPLETE SOLUTION WITH CORRESPONDING CASH FLOW DIAGRAM AND BOX THE FINAL ANSWER Hydroklean, an environmental soil cleaning company, borrowed P3.5M to finance start-up costs for a site reclamation project. How much must the company receive every six months in revenue to earn a rate of return of 15% compounded semiannually for the 5-year project period?
NPV A clinic is considering the possibility of two new purchases: new MRI equipment and new biopsy equipment. Each project requires an investment of $437,200. The expected life for each is five years with no expected salvage value. The net cash inflows associated with the two independent projects are as follows: Year MRI Equipment Biopsy Equipment 1 $214,000 $60,000 2 90,000 42,000 3 173,000 94,000 4 109,000 199,000 5 46,000 271,000 The present value tables provided in Exhibit 19B.1 and Exhibit 19B.2 must be used to solve the following problems. Required: Compute the net present value of each project, assuming a required rate of 12 percent. If the NPV is negative, enter your answer as a negative value. NPV MRI equipment $fill in the blank 1 Biopsy equipment $fill in the blank 2
Tiberius Manufacturing is considering two alternative investment proposals with the following data: Proposal X Investment $10,800,000 Useful life. Estimated annual net cash inflows for 5 years 5 years $2,160,000 Residual value $60,000 Depreciation method Straight-line Required rate of return 14% Calculate the accounting rate of return for Proposal Y. (Round any intermediate calculations and your final answer to two decimal places.) OA. 13.90% OB. 11.56% OC. 17.83% OD. 7.58% Proposal Y $440,000 5 years $99,000 $35,000 Straight-line 13%
ic Yo NS io cer ist bun ngs nnée Current Attempt in Progress Blossom Manufacturing Co. is evaluating two projects. The company uses payback criteria of three years or less. Project A has a cost of $905,000, and project B's cost is $1,247,300. Cash flows from both projects are given in the following table. Year 1 2 3 4 Project A $86,212 313,562 427,594 285,552 Project B $586,212 413,277 231,199 What are their discounted payback periods? (Round answers to 2 decimal places, e.g. 15.25. If discounted payback period exceeds life of the project, enter 0.00 for the answer.) Discounted payback period of project A Discounted payback period of project B will he accepted with a discount rate of 8 percent? átv zoom
Use Annual Cash Flow Analysis to choose which Alternative should the company choose, if the interest rate 12%. Data Alt. A Alt. B Alt. C Useful Life, Years 13 11 First Cost $2,300,000 $2,780,000 $2,540,000 Salvage Value $82,000 $118,000 $97,000 Annual Benefit $580,000 $670,000 $650,000 M&O $65,000 $78,000 $71,000 M&O Gradient $11,000 $15,000 $12,500
A firm is trying to decide between two equipment for a production activity. The following information is available. Equip 1 Equip 2 Initial investment $25,000 $17,000 7 years 7 years $0 Useful life Salvage value Operating cost per hour $0 $4.30 $5.00 At a MARR of 8% per year, determine the breakeven number of operating hours per year. Click the icon to view the interest and annuity table for discrete compounding when i = 8% per year. The breakeven number of operating hours per year is O A. 1,866 O B. 2,195 O C. 1,756
Problem 4: Consider the following EOY cash flows for two mutually exclusive alternatives (one must be chosen): Alternative A Alternative B Capital investment Annual expenses $6,000 $2,500 12 years $0 $14,000 $2,400 18 years $2,800 Useful life Market value at the end of useful life If the MARR is 5% per year. a. Determine which alternative should be selected if the repeatability assumption applies. b. Determine which alternative should be selected if the analysis period is 18 years, the repeatability assumption does not apply, and a substitute can be leased for $8,000 per year after the useful life of either alternative is over.
Rocco Manufacturing is considering following two investment proposals: Proposal X Proposal Y Investment $740,000 $508,000 Useful life 5 years 4 years Estimated annual net cash inflows received at the end of each year $154,000 $92,000 Residual value $66,000 $0 Depreciation method Straight-line Straight-line Annual discount rate 10% 9% Compute the present value of the future cash inflows from Proposal X.
QI\ a contractor want to invest his money in one of projects A or B if you know that the interest rate is 10%, choose the best altemative A or B using net present worth method ? A. B. Initial Investment 120,000 CU 135,000 CU Annual revenue Annual expenses Salvage vahie |Project life Cost of machines replaced every 3 years 15,000 CU\year 10,000 CU year 12,000 CU 12 years 17,000 CU year 11,000 CU year 20,000 CU 6 усars 3500 CU 3000 CU Q2 A company is planning to purchase a new equipment to increase the production and revemies. The cost of the equipment is 451105 CU and the equipment installation cost is 17% of its cost. Find the payback period for this equipment Year 1 Year 2 120,000 CU 130,000 CU 90,000 CU Year 3 Year 4 |100,000 CU Year 5 115,000 CU 90,000 CU Year 6 Q3 \ Machinery costs (60000 CU) and its useful life is (5 year). compute the schedule of depreciation and book value at the end of each year for the machinery by using the Sum of Year Digit method , if you know that the…

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