Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Click here to view the factor table. Machine A $75,500 8 years 0 $20,000 $5,000 Machine B $180,000 8 years. 0 $40,000 $10,000 Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is (46) D

Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Click here to view the factor table. Machine A $75,500 8 years 0 $20,000 $5,000 Machine B $180,000 8 years. 0 $40,000 $10,000 Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is (46) 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

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What is the Delta IRR of the difference between the cashflow of the machine with the higher initial value and the lower initial value with the following data? Benefits are constant over all years. Machine A Machine B Initial cost $125,000 $175,000 Life in years 3 6 Salvage after life 15 % 15% Benefits per year $72,000 S 81,000 Costs per year $15,800 $24, 200 Inflation 2.50% Costs keep increasing at 2.5% every year even when a new machine is bought.
An interior design studio is trying to choose between the following two mutually exclusive design projects: Year 0 1 2 3 Cash Flow Cash Flow (0) -$64,000 31,000 31,000 31,000 a-1 If the required return is 10 percent, what is the profitability index for both projects? (Round your answers to 3 decimal places. (e.g., 32.161)) Project I Project II -$18,000 9,700 9,700 9,700 Profitability Index a-2 If the company applies the profitability index decision rule, which project should the firm accept? O Project I O Project II Project I Project II b-1 What is the NPV for both projects? (Round your answers to 2 decimal places. (e.g., 32.16)) O Project I Project II NPV b-2lf the company applies the NPV decision rule, which project should it take?
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A company is planning to expand its business which is costing OMR 80000. The following cash inflows are expected to come. Calculate Profitability index for the machine given the rate of discounting to be 5.005% 1 Machine A Years Lia 15000 1 23000 42500 3 52300 4 اختراحد الخيارات a. 1.50 b. 0.23 C. None of the options d. 1.34 e. 254 اجل اختماري

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