Hot on the Spot Doughnuts has computed the net present value for capital expenditure locations A and
Question:
Hot on the Spot Doughnuts has computed the net present value for capital expenditure locations A and B, using the net present value method. Relevant data related to the computation are as follows:
Determine the present value index for eachproposal.
Location A Location B Total present value of net cash flow Amount to be invested Net present value $371,290 $396,096 412,600 $ (16,504) $ (24,290)
Step by Step Answer:
Present Value Index Total Present Value of net Cas...View the full answer
Accounting
ISBN: 978-0324662962
23rd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
Related Video
NPV stands for \"Net Present Value,\" which is a financial concept used to determine the value of an investment or project. It measures the difference between the present value of cash inflows and the present value of cash outflows over a given period of time, using a specific discount rate. To calculate the NPV of an investment, you need to first estimate the cash inflows and outflows associated with the investment, and then discount them back to their present values using a discount rate. The discount rate represents the cost of capital or the expected rate of return required by investors. The formula for calculating NPV is: NPV = sum of (cash inflows / (1 + discount rate)^t) - sum of (cash outflows / (1 + discount rate)^t) Where: Cash inflows: the expected cash received from the investment Cash outflows: the expected cash paid out for the investment Discount rate: the required rate of return or the cost of capital t: the time period in which the cash flow occurs If the NPV is positive, it means that the investment is expected to generate a return higher than the required rate of return or the cost of capital, and it may be considered a good investment. If the NPV is negative, it means that the investment is not expected to generate a return higher than the required rate of return or the cost of capital, and it may be considered a bad investment.
Students also viewed these Cost Accounting questions
-
Dippin doughnuts has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows: (a) Determine the present value index each...
-
Tasty Doughnuts has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows: a. Determine the present value index for each...
-
Drive By Doughnuts has computed the net present value for capital expenditure locations A and B, using the net present value method. Relevant data related to the computation are as follows: Determine...
-
You measure 30 textbooks' weights, and find they have a mean weight of 72 ounces. Assume the population standard deviation is 4 ounces. Based on this, construct a 90% confidence interval for the true...
-
Consider a 2-curve with df = 16. Obtain the 2-value that has area a. 0.025 to its left. b. 0.975 to its left. Find the required 2-values. Illustrate your work graphically.
-
Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has...
-
\(\lambda_{1}\) and \(\lambda_{2}>0\left(\lambda_{1}, \lambda_{2} ight.\) : real and distinct \()\) a. Unstable node b. Saddle point c. Node d. Focus or spiral point e. Stable node
-
Using the appropriate interest table, compute the present values of the periodic amounts, shown on page 344, due at the end of the designated periods. (a) $50,000 receivable at the end of each period...
-
Laurel Enterprises expects earnings next year of $4.31 per share and has a 50% retention rate, which it plans to keep constant. Its equity cost of capital is 9%, which is also its expected return on...
-
The system development team at the Wilcon Company is working on developing a new customer order entry system. In the process of designing the new system, the team has identified the following data...
-
Carnival Corporation has recently placed into service some of the largest cruise ships in the world. One of these ships, the Carnival Dream, can hold up to 3,600 passengers and cost $750 million to...
-
MVP Sports Equipment Company is considering an investment in one of two machines. The sewing machine will increase productivity from sewing 150 baseballs per hour to sewing 270 per hour. The...
-
If fixed costs are $561,000 and the unit contribution margin is $8.00, what is the break-even point in units if variable costs are decreased by $.50 a unit? a. 66,000 b. 70,125 c. 74,800 d. 60,000
-
An engineering student has 6 different ball bearings and 9 different gears. In how many ways can 3 ball bearings and 3 gears be selected for an experiment on friction in machine parts?
-
(a) Among 880 smart phones sold by a retailer, 72 required repairs under the warranty. Estimate the probability that a new phone, which has just been sold, will require repairs under the warranty....
-
A car rental agency has 19 compact cars and 12 intermediate-size cars. If four of the cars are randomly selected for a safety check, what is the probability of getting two of each kind?
-
How many ways can a company select 4 candidates to interview from a short list of 12 engineers?
-
The probabilities that a TV station will receive \(0,1,2,3, \ldots, 8\) or at least 9 complaints after showing a controversial program are, respectively,...
-
Discuss the sampling strategy and technique used to access the appropriate sample. Develop a hypothetical research scenario that would necessitate the use of a Solomon N-Group Design. The research...
-
Tell whether the angles or sides are corresponding angles, corresponding sides, or neither. AC and JK
-
Provide an example of an object from your discipline and suggest the kinds of properties and methods that the object can have.
-
(Postretirement Benefit Worksheet) Using the information in *E20-19, prepare a worksheet inserting January 1, 2010, balances, and showing December 31, 2010, balances. Prepare the journal entry...
-
(Postretirement Benefit Expense Computation) Garner Inc. provides the following information related to its postretirement benefits for the year 2010. Accumulated postretirement benefit obligation at...
-
(Postretirement Benefit Expense Computation) Engle hart Co. provides the following information about its postretirement benefit plan for the year 2010. Compute the postretirement benefit expense...
-
Image transcription text Introduction: The Smart Parking Management System (SPMS) project aimed to develop an efficient, automated solution for managing parking spaces in urban areas using Arduino...
-
A. Can we use human capital theory to explain "Age-Discrimination"? If so, how? B. Why do some firms prefer to hire younger workers, especially for entry level positions? C. Why do some firms...
-
Image transcription text Question 6 Not yet answered Marked out of 1.00 '1" Flag question During a mountain?biking tripr Bill and Barry are discussing the merits of having the springs and shocks used...
Study smarter with the SolutionInn App