ing Starting a commercial real estate division. It has prepared the following fo forecast of free cash flows for this division: (Click on the following icon in order to copy its contents a spreadsheet.) Free Cash Flow Year 1 - $151,000 Year 2 $14,000 Year 3 Year 4 $79,000 $192,000 Assume cash flows after year 4 will grow at 5% per year, forever. If the cost of capital for this division is the continuation value in year 4 for cash flows after year 4? What is the value today of this division? What is the continuation value in year 4 for cash flows after year 4?
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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.Jack Sprat Inc. wants to know if they invest 11,548 in new exercise equipment, plus $2.000 for installation. how long before they will receive their initial invest back from future cash flows? What is the payback period for the initial costs? Projected Cash flows Year 1: 5,000 Year 2: 7,000 Year 3: 4,000 Year 4: 1,000 Post your answer as number of years with 2 decimal places, for example 5.55Your company is planning to purchase a new log splitter for its lawn and garden business. The new splitter has an initial Investment of $225,000. It is expected to generate $30,000 of annual cash flows, provide incremental cash revenues of $174,350, and Incur Incremental cash expenses of $110,000 annually. What is the payback period and accounting rate of return (ARR)? Round your answers to 1 decimal place. Payback period ARR years
- Imagineering, Inc., is considering an investment in CAD-CAM compatible design software with the cash flow profile shown in the table below. Imagineering’s MARR is 21 %/year. End of Year Cash Flow (M$) 0 -$12 1 -$1 2 $5 3 $2 4 $5 5 $5 6 $2 7 $5 What is the future worth of this investment? $Carry all interim calculations to 5 decimal places and then round your final answer to 2 decimal places (in millions of dollars). The tolerance is ±0.2.Your company is planning to purchase a new log splitter for its lawn and garden business. The new splitter has an initial investment of $320,000. It is expected to generate $40,000 of annual cash flows, provide incremental cash revenues of $215,760, and incur incremental cash expenses of $130,000 annually. What is the payback period and accounting rate of return (ARR)? Round your answers to 1 decimal place. Payback period years ARR %Emerald Enterprises is developing a new product at the cost of $ 50,000. The new product is expected to increase the cash flow for the next five years as follows: $ 10000, $ 15000, $ 15000, $ 20000 and $ 20000. If the discounting rate is 12%, what is the IRR of the project? Note: Use EXCEL function “=IRR(Cash Flow Range)” 18.54% 15.96% 12.43% - 2.48%
- Imagineering, Inc., is considering an investment in CAD-CAM compatible design software with the cash flow profile shown in the table below. Imagineering’s MARR is 17 %/year. End of Year Cash Flow (M$) 0 -$12 1 -$1 2 $5 3 $2 4 $5 5 $5 6 $2 7 $5 What is the future worth of this investment?(Calculating IRR, payback, and a missing cash flow) The Merriweather Printing Company is trying to decide on the merits of constructing a new publishing facility. The project is expected to provide a series of positive cash flows for each of the next four years. The estimated cash flows associated with this project are as follows: Year Project Cash Flow $760,000 390,000 290,000 450,000 (Click on the icon O in order to copy its contents into a spreadsheet.) 2 3 4 If you know that the project has a regular payback of 2.1 years, what is the project's IRR? The IRR of the project is %. (Round to two decimal places.)Washington Tenters Inc. specializes in making advanced camping tents. The company is expanding its operations and wants to open a new plant costing $600,000. Please Calculate: a. Payback period b. Net Present Value. (Assume the company expected 15% rate of return). The company expects varying annual net cash flows as follows; Year Year 1 Year 2 Year 3 Year 4 Year 5 Net Cash Flow $120,000 $150,000 $160,000 $170,000
- . Cols Communications is trying to estimate the first-year cash flow (at Year 1) for a proposed project. The financial staff has collected the following information on the project: Sales revenues $15 million Operating costs (excluding depreciation) 10.5 million Depreciation 3 million Interest expense 3 million The company has a 40% tax rate, and its WACC is 11%. What is the project’s cash flow for the first year (t = 1)? If the tax rate dropped to 30%, what is the project’s cash flow for the first year (t = 1)?A nursery would like to build another commercial greenhouse to expand its operations. It estimates that building another greenhouse will cost $220,000. To operate another greenhouse, the nursery estimates an additional labor and utilities will cost $40,000 per year. The greenhouse is expected to produce an additional $80,000 of revenue at the end of year 1; this revenue is expected to increase by $20,000 each year. Choose a cash flow diagram. A В $220K $160K $140K $120K $100K $80K (+) (+) 1 5 End of Year 5 2 3 4 1 2 3 (-) (-) $80K $100K $120K $140K $160K $220K 4,Innovation Company is thinking about marketing a new software product. Upfront costs to market and develop the product are $4.98 million. The product is expected to generate profits of $1.15 million per year for 10 years. The company will have to provide product support expected to cost $99,000 per year in perpetuity. Assume all profits and expenses occur at the end of the year. a. What is the NPV of this investment if the cost of capital is 5.6% ? Should the firm undertake the project? Repeat the analysis for discount rates of 1.3% and 16.3%, respectively. b. What is the IRR of this investment opportunity? c. What does the IRR rule indicate about this investment? a. What is the NPV of this investment if the cost of capital is 6.2%? Should the firm undertake the project? Repeat the analysis for discount rates of 1.1% and 17.8%, respectively. If the cost of capital is 6.2%, the NPV will be $ (Round to the nearest dollar.) answer this Should the firm undertake the project? (Select the…