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mars1129 [50]
3 years ago
13

Using a 14% cost of capital, calculate the net present value for each of the independent projects shown in the following table,

and indicate whether each is acceptable. Initial investment: Pr. A -20,000, Pr. B -600,000, Pr. C -150,000, Pr. D -760,000, Pr. E -100,000 Cash inflows: Project A Years 1-10 3,000 each yr. Project B 120,000, 145,000, 170,000, 190,000, 220,000, 240,000 Project C 18,000, 17,000 ,16,000 , 15,000, 14,000, 13,000, 12,000, 11,000, 10,000. Project D 185,000 years 1-8 Project E 0, 0, 0, 25,000, 36,000, 0, 60,000, 72,000, 84,000.
Business
1 answer:
jenyasd209 [6]3 years ago
7 0

Answer:

For project A ,

NPV = $-4,351.65

The project A isn't acceptable because the NPV is negative

For project B ,

NPV = $67,678.24

The project is acceptable because the NPV is postive

For project C,

NPV = $-76,528.17

The project C isnt acceptable because the NPV is negative

For project D,

NPV = $98,189.82

Project D is acceptable because the NPV is postive.

For project E ,

NPV = $8,548.44

Project E is acceptable because the NPV is postive.

Explanation:

Net present value is the present value of after tax cash flows from an investment less the amount invested.

Net present value can be calculated using a financial calculator

For project A,

Cash flow in year 0 =  -20,000

Cash flow each year from year 1-10 = 3,000

I = 14%

NPV = $-4,351.65

The project A shouldn't be embarked on because the NPV is negative

For Project B,

Cash flow in year 0 = $ -600,000

Cash flow in year 1 = 120,000

Cash flow in year 2 = 145,000

Cash flow in year 3 = 170,000

Cash flow in year 4 = 190,000

Cash flow in year 5 =220,000

Cash flow in year 6= 240,000 

I = 14%

NPV = $67,678.24

The project should be embarked on because the NPV is postive.

For Pr. C ,

Cash flow in year 0 = -150,000, 

Cash flow in year 1 = 18,000

Cash flow in year 2 = 17,000

Cash flow in year 3 = 16,000

Cash flow in year 4 = 15,000

Cash flow in year 5 = 14,000,

Cash flow in year 6 = 13,000

Cash flow in year 7 = 12,000

Cash flow in year 8 = 11,000

Cash flow in year 9= 10,000

I = 14%

NPV = $-76,528.17

The project C shouldn't be embarked on because the NPV is negative

For Pr. D,

Cash flow in year 0 = -760,000

Cash flow each year from year 1 to 8 = 185,000 

I = 14%

NPV = $98,189.82

Project D should be embarked on because the NPV is postive.

For Pr. E,

Cash flow in year 0 = -100,000

Cash flow each year for year 1 to 3 = 0 cash flow in year 4 = 25,000

Cash flow in year 5 = 36,000

Cssh flpw in year 6 = 0

Cash flow in year 7 = 60,000

Cash flow in year 8 = 72,000

Cash flow in year 9 = 84,000.

I = 14%

NPV = $8,548.44

Project E is profitable and can be undertaken.

To find the NPV using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

I hope my answer helps you

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Explanation:

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a) The computation of the single plantwide predetermined overhead rate for Tent Master is $6 per DLH ($252,000/42,000).

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                               Pup Tents     Pop-up Tents

Overhead cost     $24 ($6 x 4)    $18 ($6 x 3)

c) The computation of the product cost per unit for Pup and Pop-up Tents is as follows:

Per Unit      Selling     Direct     Direct  Overhead     Product

                    Price   Materials   Labor    per unit    Cost / Unit

Pup tent       $ 78         $ 20      $ 45        $24             $89

Pop-up tent    73             25         30         $18             $73

d) The computation of the gross profit per unit (selling price per unit minus the product cost per unit) of Pup and Pop-up Tents is as follows:

Per Unit      Selling     Direct    Direct  Overhead   Product    Gross Profit

                    Price   Materials  Labor    per unit   Cost / Unit  (Loss) per unit

Pup tent      $ 78       $ 20      $ 45         $24             $89     ($11) ($78 - $89)

Pop-up tent   73          25          30          $18             $73       $0 ($73 - $73)

<h3>What does a product cost?</h3>

The determination of the product cost includes the costs of direct materials, direct labor, and overhead.  The overhead cost is allocated to each unit based on a predetermined overhead rate (budgeted overheads/budgeted usage) or using an activity-based costing technique.

<h3>Data and Calculations:</h3>

Budgeted overhead costs = $252,000

Budgeted direct labor hours = 42,000

<h3>Question Completion:</h3>

Tent Master produces Pup tents and Pop-up tents. The company budgets $252,000 of overhead cost and 42,000 direct labor hours. Additional information follows:

Per Unit      Selling Price  Direct Materials  Direct Labor  DL Hours

Pup tent          $ 78                   $ 20                   $ 45            4

Pop-up tent       73                       25                      30            3

<h3>Required: </h3>

1. Compute a single plantwide overhead rate assuming the company allocates overhead costs based on 42,000 direct labor hours.

2. Pup tents use 4 direct labor hours (DLH) per unit and Pop-up tents use 3 direct labor hours per unit. Compute the overhead cost per unit for each product.

3. Compute the product cost per unit for each product.

4. For each product, compute the gross profit per unit (selling price per unit minus the product cost per unit).

Learn more about calculating the predetermined overhead rates at brainly.com/question/26372929

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Answer:

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Explanation:

Shared leadership style in an organization is one where leadership is not the responsibility of just one person, but rather, is distributed among employees in the organization.

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3 years ago
An investment is advertised as returning 5.5% every 6 months (semiannually), compounded semiannually. If $50,000 is invested, th
Alecsey [184]

Answer:

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Explanation:

There seems to be an error in the compounding equation written as A(t) = 50,000(1.055)2t.

Compounding the semi annual return, the equation should be

A(t) = 50,000 * 1.055^{2t}

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= 1.055^{2} -1

= 1.113025 - 1

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= 11.3% (to the nearest tenth of a percent).

(B) In 20 years, the investment will be worth

A(t) = 50,000 * 1.055^{2t} (where t=20)

= A(t) = 50,000 * 1.055^{2*20}

= A(t) = 50,000 * 1.055^{40}

= 50,000 * 8.5133

= $425,665

= $430,000 (to the nearest ten thousand dollars)

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3 years ago
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