Step by step answer please The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6%for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment:Net CashFlowOperatingYearIncome1$18,750$93,750218,75093,750318,75093,75018,75093,750518,75093,750The cash payback period for this investment isa. 5 yearsOb. 3 yearsO c. 4 yearsOd. 20 years

Step 1: Cash payback period is capital budgeting tool to determine how many years the project will…

Answered: The management of Wyoming Corporation…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 18EB: Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the...

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Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the following cash flows over the next five years: $99,000, $88,000, $92,000. $87,000, and $72,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel. see Appendix C.
Assume that an investment of 100,000 produces a net cash flow of 60,000 per year for two years. The discount factor for year 1 is 0.89 and for year 2 is 0.80. The NPV is a. 0 b. 6,800 c. 1,400 d. (4,000)
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)?
Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a net cash inflow one year from now of 810,000. Assume the cost of capital is 10 percent. Required: 1. Break the 810,000 future cash inflow into three components: a. The return of the original investment b. The cost of capital c. The profit earned on the investment 2. Now, compute the present value of the profit earned on the investment. 3. Compute the NPV of the investment. Compare this with the present value of the profit computed in Requirement 2. What does this tell you about the meaning of NPV?
Hicks Company is considering an investment opportunity with the following expected net cash inflows: Year 1, $235,000; Year 2, $195,000; Year 3, $125,000. The company uses a discount rate of 6% and the initial investment is $365,000. LOADING... (Click the icon to view Present Value of $1 table.) LOADING... (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Calculate the NPV of the investment. Should the company invest in the project? Why or why not? Use the following table to calculate the net present value of the project. (Enter any factor amounts to three decimal places, X.XXX.) Net Cash PV Factor Present Years Inflow (i = 6%) Value Present value of each year's inflow: 1 (n = 1) 2 (n = 2) 3 (n = 3) Total PV of cash inflows…
Stellan Manufacturing is considering the following two investment proposals: Proposal X Proposal Y $510,000 4 years Investment Useful life Estimated annual net cash inflows received at the end of each year Residual value Depreciation method Annual discount rate 1 2455 N. Compute the present value of the future cash inflows from Proposal Y. Present value of an ordinary annuity of $1: 8% 9% 10% 2 3 6 0.926 1.783 2.577 3.312 3.993 4.623 OA. $255,000 OB. $295,800 OC. $317,520 OD. $272,085 0.917 1.759 2.531 3.240 3.809 4.486 $732,000 5 years 0.909 1.736 2.487 3.170 3.791 4.355 $164,000 $68,000 Straight-line Straight-line 10% $98,000 $0 ... 9%
Fuente, Incorporated, has identified an investment project with the following cash flows. Cash Flow $700 925 1,125 1,250 Year 1 2 3 4 a.lf the discount rate is 11 percent, what is the future value of these cash flows in year 4? Future value at 11% b.What is the future value at a discount rate of 18 percent? Future value at 18%
The Hudson Corporation makes an investment of $65,240 that provides the following cash flow: Year Cash Flow 1 $ 32,000 32,000 2 3 20,000 Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. What is the net present value at a discount rate of 9 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places. Net present value b. What is the internal rate of return? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
Beyer Company is considering buying an asset for $270,000. It is expected to produce the following net cash flows. Year Year 1 $66,000 Initial investment Year 1 Year 2 Year 3 Year 4 Year 5 Total Net Cash Flows Net cash flows Compute the payback period for this Investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Perlod answer to 2 decimal places.) $ (270,000) Year 2 $39,000 Payback period = Year 3 $67,000 Cumulative Cash Flows Year 4 $200,000 Year 5 $22,000
Castle Company is considering an investment opportunity with the following expected net cash inflows: Year 1, $225,000; Year 2, $165,000; Year 3, $120,000. The company uses a discount rate of 9% and the initial investment is $325,000. F(Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Calculate the NPV of the investment. Should the company invest in the project? Why or why not? Use the following table to calculate the net present value of the project. (Enter any factor amounts to three decimal places, X.XXX.) Net Cash Inflow PV Factor (i = 9%) Years Year 1 Year 2 Year 3 Present value of each year's inflow: (n = 1) Present value of each year's inflow: (n=2) Present value of each year's inflow: (n = 3) Total PV of cash inflows Year 0 Initial investment Net present value of the project example Get more help. Present Value Reference Periods Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Period 8…
McCann Co. has identified an investment project with the following cash flows. Year Cash Flow 1 $800 2 1,030 3 1,340 4 1,110 a If the discount rate is 10 percent, what is the present value of these cash flows? b What is the present value at 18 and 28 percent?
Mendez Company has identified an investment project with the following cash flows. Year Cash Flow 1 $770 2 1,030 3 1,290 4 1,400 a. If the discount rate is 10 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value at 17 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the present value at 25 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

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