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3 years ago

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A potential CB project has the following cash flows: CF0 = -$500, CF1 = $300, CF2 = $200, CF3 = $150. WACC = 6%. Compute the fol

lowing(Show work):A. What is Payback Period:B. What is NPV:C. What is IRR:

1 answer:

lisov135 [29]3 years ago

4 0

Answer:

A. 2 years

B. 86.96

C. 16.46%

Explanation:

Payback period calculates the amount of time taken to recoup the initial investment made on a project.

The net present value substracts the present value of tax adjusted cash flows from the amount invested in the project.

Using the financial calculator to find the NPV:

Cash flow for year 0 = -500

Cash flow for year 1 = 300

Cash flow for year 2 = 200

Cash flow for year 3 = 150

Interest rate = 6%

NPV = $86.96

Internal rate of return is the discount rate that equates the tax adjusted cash flows from a project to the original amount invested.

Using the financial calculator to find the NPV:

Cash flow for year 0 = -500

Cash flow for year 1 = 300

Cash flow for year 2 = 200

Cash flow for year 3 = 150

Interest rate = 6%

IRR = 16.46%

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Answer:

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3 years ago

John ________ a difficult time at the university this year. (have)

Slav-nsk [51]

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3 years ago

Amanda Forsythe of Springfield, Missouri, must decide whether to buy or lease a car she has selected. She has negotiated a purch

geniusboy [140]

Answer:

Since the cost of financing for leasing is higher than buying, Amanda she should finance the car.

Explanation:

Solution

Buy versus Lease problem:

Now,

Buy case

The Purchase price = Gross capitalized cost = $30,000

The Down payment = $3300

The Present value of borrowing from credit union = 30,000 - 3300 = $26700

The EMI payment = $614.88,

No of months = 48, Annual percentage rate (APR) = 5%

The Monthly Percentage rate = 5%/12 = 0.4%

Then

We find future value at the end of 48 months

By applying Excel,

PV=26700, N=48, I/Y=0.4%, PMT=614.88

FV = -0.14079 which is approximate to Zero (given that EMI payment was rounded off to digit of 2 , FV has resulted slightly differ from zero)

So, at the end of four years, the car has no residual value as per the buy option.

The Finance charges of borrowing the car = Sum of all the EMI payments – principal payment

= $61488*48 - 26700 = $2924.724

The lease case

The cost reduction capital= $3300 (capitalized cost is paid by customers to decrease the rate of lease while leasing cars)

Fee disposition on the car = $350

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Then,

PV = $30,000 - $3300 = $26,700, EMI = $330, Number of months leased = 48

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Therefore, since the cost of financing for leasing is higher than buying, Amanda she should finance the car.

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2 years ago

A management information system (MIS) typically provides standard reports generated with data and information from a transaction

Svet_ta [14]

Answer:

True

Explanation:

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6 0

3 years ago

In its 2017 annual report, Allen Company reports the following (in thousands): 2017 2016 Total revenue $102,500 $99,400 Property

lesantik [10]

Answer:

2018 forecasted depreciation expense = 2065 thousand

so correct option is D. $2,065 thousand

Explanation:

given data

2017 2016

Total revenue $102,500 $99,400

gross 41,300 38,700

net 16,540 14,905

Depreciation expense 1,935 1,655

revenue growth = 5 %

to find out

2018 forecasted depreciation expense

solution

we know here Depreciation expense for 2017 is = 1935

and Divide by Property, plant, equipment, gross 2016 is = 38700

and Depreciation rate for 2017 = 5.00%

Property, plant, equipment, gross 2017 = 41300

Depreciation rate = 5.00%

so for 2018 forecasted depreciation expense is

2018 forecasted depreciation expense = gross 2017 × Depreciation rate ........1

2018 forecasted depreciation expense = 41300 × 5%

2018 forecasted depreciation expense = 2065 thousand

so correct option is D. $2,065 thousand

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3 years ago