Required information [The following information applies to the questions displayed below.] The following capital expenditure projects have been proposed for management's consideration at Scott Inc. for the upcoming budget year: Use Table 6-4 and Table 6-5. (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.) Project Year(s) $(50,000) 5,000 10,000 15,000 20,000 25,000 Initial investment Amount of net cash return $(25,000) 5,000 5,000 5,000 5,000 5,000 5,000 _$ 1,881 $(50,000) 16,000 $(100,000) 30,000 30,000 15,000 15,000 15,000 15,000 2,942 $(25,000) 1. 16,000 16,000 16,000 16,000 3 10,000 10,000 10,000 6,000 4 5 Per year 6-10 NPV (14% discount rate) Present value ratio 1.04 Required: a. Calculate the net present value of projects B, C, and D, using 14% as the cost of capital for Scott Inc. (Negative amounts should be indicated by a minus sign.) Net Present Value Project B D
Required information [The following information applies to the questions displayed below.] The following capital expenditure projects have been proposed for management's consideration at Scott Inc. for the upcoming budget year: Use Table 6-4 and Table 6-5. (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.) Project Year(s) $(50,000) 5,000 10,000 15,000 20,000 25,000 Initial investment Amount of net cash return $(25,000) 5,000 5,000 5,000 5,000 5,000 5,000 _$ 1,881 $(50,000) 16,000 $(100,000) 30,000 30,000 15,000 15,000 15,000 15,000 2,942 $(25,000) 1. 16,000 16,000 16,000 16,000 3 10,000 10,000 10,000 6,000 4 5 Per year 6-10 NPV (14% discount rate) Present value ratio 1.04 Required: a. Calculate the net present value of projects B, C, and D, using 14% as the cost of capital for Scott Inc. (Negative amounts should be indicated by a minus sign.) Net Present Value Project B D
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:TABLE 6.4
FACTORS FOR CALCULATING THE PRESENT VALUE OF $1
Discount Rate
No. of
Periods
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
1
0.980
0.9615
0.9434
0.9259
0.9091
0.8929
0.8772
0.8621
0.8475
0.8333
0.961
0.9246
0.8900
0.8573
0.8264
0.7972
0.7695
0.7432
0.7182
0.6944
0.942
0.8890
0.8396
0.7938
0.7513
0.7118
0.6750
0.6407
0.6086
0.5787
0.924
0.8548
0.7921
0.7350
0.6830
0.6355
0.5921
0.5523
0.5158
0.4823
0.906
0.8219
0.7473
0.6806
0.6209
0.5674
0.5194
0.4761
0.4371
0.4019
6.
0.888
0.7903
0.7050
0.6302
0.5645
0.5066
0.4556
0.4104
0.3704
0.3349
7
0.871
0.7599
0.6651
0.5835
0.5132
0.4523
0.3996
0.3538
0.3139
0.2791
0.853
0.7307
0.6274
0.5403
0.4665
0.4039
0.3506
0.3050
0.2660
0.2326
9.
0.837
0.7026
0.5919
0.5002
0.4241
0.3606
0.3075
0.2630
0.2255
0.1938
10
0.820
0.6756
0.5584
0.4632
0.3855
0.3220
0.2697
0.2267
0.1911
0.1615
11
0.804
0.6496
0.5268
0.4289
0.3505
0.2875
0.2366
0.1954
0.1619
0.1346
12
0.788
0.6246
0.4970
0.3971
0.3186
0.2567
0.2076
0.1685
0.1372
0.1122
13
0.773
0.6006
0.4688
0.3677
0.2897
0.2292
0.1821
0.1452
0.1163
0.0935
14
0.758
0.5775
0.4423
0.3405
0.2633
0.2046
0.1597
0.1252
0.0985
0.0779
15
0.743
0.5553
0.4173
0.3152
0.2394
0.1827
0.1401
0.1079
0.0835
0.0649
16
0.728
0.5339
0.3936
0.2919
0.2176
0.1631
0.1229
0.0930
0.0708
0.0541
17
0.714
0.5134
0.3714
0.2703
0.1978
0.1456
0.1078
0.0802
0.0600
0.0451
18
0.700
0.4936
0.3503
0.2502
0.1799
0.1300
0.0946
0.0691
0.0508
0.0376
19
0.686
0.4746
0.3305
0.2317
0.1635
0.1161
0.0829
0.0596
0.0431
0.0313
20
0.673
0.4564
0.3118
0.2145
0.1486
0.1037
0.0728
0.0514
0.0365
0.0261
21
0.660
0.4388
0.2942
0.1987
0.1351
0.0926
0.0638
0.0443
0.0309
0.0217
22
0.647
0.4220
0.2775
0.1839
0.1228
0.0826
0.0560
0.0382
0.0262
0.0181
23
0.634
0.4057
0.2618
0.1703
0.1117
0.0738
0.0491
0.0329
0.0222
0.0151
24
0.622
0.3901
0.2470
0.1577
0.1015
0.0659
0.0431
0.0284
0.0188
0.0126
25
0.610
0.3751
0.2330
0.1460
0.0923
0.0588
0.0378
0.0245
0.0160
0.0105
30
0.552
0.3083
0.1741
0.0994
0.0573
0.0334
0.0196
0.0116
0.0070
0.0042
35
0.500
0.2534
0.1301
0.0676
0.0356
0.0189
0.0102
0.0055
0.0030
0.0017
40
0.453
0.2083
0.0972
0.0460
0.0221
0.0107
0.0053
0.0026
0.0013
0.0007
45
0.410
0.1712
0.0727
0.0313
0.0137
0.0061
0.0027
0.0013
0.0006
0.0003
50
0.372
0.1407
0.0543
0.0213
0.0085
0.0035
0.0014
0.0006
0.0003
0.0001
![Required information
[The following information applies to the questions displayed below.]
The following capital expenditure projects have been proposed for management's consideration at Scott Inc. for the
upcoming budget year: Use Table 6-4 and Table 6-5. (Use appropriate factor(s) from the tables provided. Round the PV
factors to 4 decimals.)
Project
Year(s)
B
D
$ (25,000)
$(50,000)
16,000
16,000
16,000
16,000
16,000
$ (50,000)
5,000
10,000
15,000
20,000
25,000
Initial investment
$(25,000)
5,000
5,000
5,000
5,000
5,000
5,000
$ 1,081
$(100,000)
30,000
30,000
Amount of net cash return
1
2
3.
10,000
10,000
10,000
6,000
15,000
15,000
15,000
15,000
2,942
4
5
Per year
6-10
NPV (14% discount rate)
2$
$
Present value ratio
1.04
Required:
a. Calculate the net present value of projects
indicated by a minus sign.)
and D, using
as the cost of capital for Scott Inc. (Negative amounts should be
Project
Net Present
Value
B
D](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F354988b1-49b5-4361-999f-1aaef20d6b01%2Ff96623ba-b831-42c3-880c-0cbce17cf700%2Fgpkgbq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
The following capital expenditure projects have been proposed for management's consideration at Scott Inc. for the
upcoming budget year: Use Table 6-4 and Table 6-5. (Use appropriate factor(s) from the tables provided. Round the PV
factors to 4 decimals.)
Project
Year(s)
B
D
$ (25,000)
$(50,000)
16,000
16,000
16,000
16,000
16,000
$ (50,000)
5,000
10,000
15,000
20,000
25,000
Initial investment
$(25,000)
5,000
5,000
5,000
5,000
5,000
5,000
$ 1,081
$(100,000)
30,000
30,000
Amount of net cash return
1
2
3.
10,000
10,000
10,000
6,000
15,000
15,000
15,000
15,000
2,942
4
5
Per year
6-10
NPV (14% discount rate)
2$
$
Present value ratio
1.04
Required:
a. Calculate the net present value of projects
indicated by a minus sign.)
and D, using
as the cost of capital for Scott Inc. (Negative amounts should be
Project
Net Present
Value
B
D
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