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- The cash flow after taxes for two machineries A and B are given in the table below.Year wise Cash flow A B1 22000 70002 25000 50003 28000 45004 5000 280005 4500 250006 7000 22000The estimated useful life of the machines is 6 years and the discount rate is 11%. The cost of each machine is Rs60000 1. Discuss the steps of application of the concept of NPV to the given situation. Determine the NPV of Machine A . 2. Determine the NPV of the Machine B. Discuss, which machinery should be acquired and why?The following present value factors are provided for use in this problem. Periods Present Valueof $1 at 11% Present Value of anAnnuity of $1 at 11% 1 0.9009 0.9009 2 0.8116 1.7125 3 0.7312 2.4437 4 0.6587 3.1024 Cliff Co. wants to purchase a machine for $62,000, but needs to earn a return of 11%. The expected year-end net cash flows are $24,000 in each of the first three years, and $28,000 in the fourth year. What is the machine's net present value? Multiple Choice $(3,351). $15,093. $77,093. $(43,556). $100,000.DT Lid, provides you the following information 1.Purchase price of machine Rs. 190000 2.Installation purchase Rs.10000 3.Useful life of machine 3 years. 4.Salvage value at the end of useful life nil 5 5.Tax rate 30% 6.Cost of capital 10% 7.Cash flows before depreciation and tax 100000 p.a. Required: Calculate the Discounted payback period.
- XMohan & Co. is considering the purchase of machine. Two machines X and Y each Costing Rs.50, 000 are available. Earnings after taxes before depreciation are expected to be as under: Year 1 2 3 4 5 Machine 'X' 15000 20000 25000 15000 10000 (Rs.) Machine 'Y' (Rs.) 5000 15000 20000 30000 20000 Estimate the two alternatives according to: (a) Payback method, and (b) NPV method a discount rate of 10% is to be used.Consider an asset that you purchase for $183.836. Its nominal resale value after 3 years of ownership is $16,948. At that time you plan to sell it and invest the proceeds elsewhere. What is the net present cost to you of holding this asset if the nominal discount raM is 6%?Consider the following two machines a company can purchase. The following table provides the costs of the machines and the annual cash flows obtained from the machines over their lifetimes. Machine A Initial Cost $19,000 Cash Inflows per year Years of Service Machine B $9,000 $6,000 $10,000 6 5 The discount rate is 7%. What is the net present value for each machine? Machine A Number Machine B = Number Click "Verify" to proceed to the next part of the question. This question has 3 parts (i.e., you will need to click "verify" 3 times)
- Project Y requires a $350,000 investment for new machinery with a four-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Revelant Time Value of Money factors: PV $1 (8%, 4 years): PVA $1 (8%, 4 years): PVAD $1 (8%, 4 years): FV $1 (8%, 4 years): FVA $1 (8%, 4 years): FVAD $1 (8%, 4 years): 0.7350 3.3121 3.5771 1.3605 4.5061 4.8666 Project Y $350,000 157,500 87,500 49,000 $56,000gnment (II) Saved Fox Co. has identified an investment project with the following cash flows. Year Cash Flow $1,290 1,240 1,590 2. 3 1,950 a. If the discount rate is 9 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 23 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Present value at 9 percent b. Present value at 17 percent C. Present value at 23 percent re to searchDT Ltd. provides you the following information: 1. Purchase price of machine Rs. 1,90,000 2. Installation expenses Rs. 10,000 3. Useful life of machine 5 years 4. Salvage value at the end of useful life nil 5. Tax Rate 30% 6. Cost of capital 10% 7. Cash flows before depreciation and tax Rs. 1,00,000 p.a. Required: Calculate the Discounted Payback Period.
- Evaluate the two alternatives A and B and decide the economic justified alternative using: Present worth method, Annual worth method, Future worth method I.R.R method E.R.R Method , E.R.R.R method M.A.R.R = 15%, the details of alternatives are shown in the table below Alternatives B A $6,000 $7,500 Investments Useful life (years) 5 10 Annual disbursements $2,500 $3,500 Annual revenues $4,500 $6,000 Salvage values $500 $1,000Asset Purchase Price BWP Inc. is considering the purchase of an asset. BWPs required rate of return on new assets is 12%. The expected net cash inflows generated by the new asset are as follows: Required: Given that the net cash inflows can be realized, what is the maximum amount BWP should be willing to pay for the new asset? If BWP pays that amount, at what amount should BWP recognize the asset on the balance sheet? Assume that each cash inflow occurs at the end of the year. (Contributed by Norma C. Powell)Doak Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 -15,300 1 6,400 2 7,600 3 7,200 4 6,000 5 -3,400 The company uses an interest rate of 9 percent on all its projects. Calculate the MIRR of the project using all three methods. Discounting approach ____________% Reinvestment approach ___________% Combination approach ____________%