Showing 892–900 of 1959 results
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Net Present Value – Swanson Industries has four potential projects
$2.50Net Present Value – Swanson Industries has four potential projects all with an initial cost of $2,000,000. The capital budget for the year will only allow Swanson industries to accept one of the four projects. Given the discount rates and the future cash flows of each project, which project should they accept?
Cash Flows Project M Project N Project O Project P Year one $500,000 $600,000 $1,000,000 $300,000 Year two $500,000 $600,000 $800,000 $500,000 Year three $500,000 $600,000 $600,000 $700,000 Year four $500,000 $600,000 $400,000 $900,000 Year five $500,000 $600,000 $200,000 $1,100,000 Discount Rate 6% 9% 15% 22% -
Net Present Value – Campbell Industries has a project
$1.50Net Present Value – Campbell Industries has a project with the following projected cash flows:
Initial Cost, Year 0: $468,000
Cash flow year one: $135,000
Cash flow year two: $240,000
Cash flow year three: $185,000
Cash flow year four: $135,000
- Using an 8% discount rate for this project and the NPV model should this project be accepted or rejected?
- Using a 14% discount rate?
- Using a 20% discount rate?
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Net Present Value – Swanson Industries has a project
$1.50Net Present Value – Swanson Industries has a project with the following projected cash flows:
Initial Cost, Year 0: $240,000
Cash flow year one: $25,000
Cash flow year two: $75,000
Cash flow year three: $150,000
Cash flow year four: $150,000
- Using a 10% discount rate for this project and the NPV model should this project be accepted or rejected?
- Using a 15% discount rate?
- Using a 20% discount rate?
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Comparing Payback Period and Discounted Payback Period – Neilsen Incorporated is switching from Payback Period
$3.00Comparing Payback Period and Discounted Payback Period – Neilsen Incorporated is switching from Payback Period to Discounted Payback Period for small dollar projects. The cut-off period will remain at 3 years. Given the following four projects cash flows and using a 10% discount rate, which projects that would have been accepted under Payback Period will now be rejected under Discounted Payback Period?
Cash Flows
Project One
Project Two
Project Three Project Four Initial cost $10,000 $15,000 $8,000 $18,000 Year One $4,000 $7,000 $3,000 $10,000 Year Two $4,000 $5,500 $3,500 $11,000 Year Three $4,000 $4,000 $4,000 $0 -
Comparing Payback Period and Discounted Payback Period – Mathew Incorporated is debating using Payback Period
$2.50Comparing Payback Period and Discounted Payback Period – Mathew Incorporated is debating using Payback Period versus Discounted Payback Period for small dollar projects. The Information Officer has submitted a new computer project of $15,000 cost. The cash flows will be $5,000 each year for the next five years. The cut-off period used by Mathew Incorporated is three years. The Information Officer states it doesn’t matter what model the company uses for the decision, it is clearly an acceptable project. Demonstrate for the IO that the selection of the model does matter!
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Discounted Payback Period – Graham Incorporated uses discounted payback period for projects
$10.00Discounted Payback Period – Graham Incorporated uses discounted payback period for projects under $25,000 and has a cut off period of 4 years for these small value projects. Two projects, R and S are under consideration. The anticipated cash flows for these two projects are listed below. If Graham Incorporated uses an 8% discount rate on these projects are they accepted or rejected? If they use 12% discount rate? If they use a 16% discount rate? Why is it necessary to only look at the first four years of the projects’ cash flows?
Cash Flows Project R Project S Initial Cost $24,000 $18,000 Cash flow year one $6,000 $9,000 Cash flow year two $8,000 $6,000 Cash flow year three $10,000 $6,000 Cash flow year four $12,000 $3,000 -
Discounted Payback Period – Given the following four projects and their cash flows
$7.00Discounted Payback Period – Given the following four projects and their cash flows, calculate the discounted payback period with a 5% discount rate, 10% discount rate, and 20% discount rate. What do you notice about the payback period as the discount rate rises? Explain this relationship.
Projects A B C D Cost $10,000 $25,000 $45,000 $100,000 Cash Flow Year One $4,000 $2,000 $10,000 $40,000 Cash Flow Year Two $4,000 $8,000 $15,000 $30,000 Cash Flow Year Three $4,000 $14,000 $20,000 $20,000 Cash Flow Year Four $4,000 $20,000 $20,000 $10,000 Cash Flow year Five $4,000 $26,000 $15,000 $10,000 Cash Flow Year Six $4,000 $32,000 $10,000 $0 -
Payback Period – What are the Payback Periods of Projects E, F, G and H
$2.50Payback Period – What are the Payback Periods of Projects E, F, G and H? Assume all cash flows are evenly spread throughout the year. If the cut-off period is three years, which projects do you accept?
Projects E F G H Cost $40,000 $250,000 $75,000 $100,000 Cash Flow Year One $10,000 $40,000 $20,000 $30,000 Cash Flow Year Two $10,000 $120,000 $35,000 $30,000 Cash Flow Year Three $10,000 $200,000 $40,000 $30,000 Cash Flow Year Four $10,000 $200,000 $40,000 $20,000 Cash Flow year Five $10,000 $200,000 $35,000 $10,000 Cash Flow Year Six $10,000 $200,000 $20,000 $0 -
Payback Period – Given the cash flows of the four projects,
$2.50Payback Period – Given the cash flows of the four projects, A, B, C, and D, and using the Payback Period decision model, which projects do you accept and which projects do you reject with a three year cut-off period for recapturing the initial cash outflow? Assume that the cash flows are equally distributed over the year for Payback Period calculations.
Projects A B C D Cost $10,000 $25,000 $45,000 $100,000 Cash Flow Year One $4,000 $2,000 $10,000 $40,000 Cash Flow Year Two $4,000 $8,000 $15,000 $30,000 Cash Flow Year Three $4,000 $14,000 $20,000 $20,000 Cash Flow Year Four $4,000 $20,000 $20,000 $10,000 Cash Flow year Five $4,000 $26,000 $15,000 $0 Cash Flow Year Six $4,000 $32,000 $10,000 $0