As part of your role as a plant manager, you must study the profitability of 5...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
As part of your role as a plant manager, you must study the profitability of 5 investment projects resulting from the head office continuous improvement program. For all of these projects, the minimum acceptable rate of return (MARR) before tax was set at 13%. The first project (A) has a duration of 5 years, requires an initial investment of $ 60,000, will have estimated benefits of $ 15,000 for the first year and then increase by 10% per year. No residual value is anticipated at the end of this project. The second project (B) has a duration of 7 years, requires an initial investment of $ 75,000, will have estimated benefits of $ 17,500 per year. No residual value is anticipated at the end of this project. The third project (C) has a duration of 3 years, requires an initial investment of $ 85,000, will have estimated benefits of $ 20,000 per year. A residual value of $ 50,000 is expected at the end of this project. The fourth project (D) has a duration of 10 years, requires an initial investment of $ 120,000, will have losses estimated at $ 40,000 for the first year and then reach profits of $ 30,000 for subsequent years. No residual value is anticipated at the end of this project. Finally, the fifth project (D) has a perpetual duration, requires an initial investment of $ 105,000, will have estimated benefits of $ 15,000 per year. No residual value is anticipated at the end of this project. For each of these projects, calculate the net present value this (NPV) and the internal rate of return (IRR). For your answers, please complete the following table: NPV (13%) IRR A B C D E As part of your role as a plant manager, you must study the profitability of 5 investment projects resulting from the head office continuous improvement program. For all of these projects, the minimum acceptable rate of return (MARR) before tax was set at 13%. The first project (A) has a duration of 5 years, requires an initial investment of $ 60,000, will have estimated benefits of $ 15,000 for the first year and then increase by 10% per year. No residual value is anticipated at the end of this project. The second project (B) has a duration of 7 years, requires an initial investment of $ 75,000, will have estimated benefits of $ 17,500 per year. No residual value is anticipated at the end of this project. The third project (C) has a duration of 3 years, requires an initial investment of $ 85,000, will have estimated benefits of $ 20,000 per year. A residual value of $ 50,000 is expected at the end of this project. The fourth project (D) has a duration of 10 years, requires an initial investment of $ 120,000, will have losses estimated at $ 40,000 for the first year and then reach profits of $ 30,000 for subsequent years. No residual value is anticipated at the end of this project. Finally, the fifth project (D) has a perpetual duration, requires an initial investment of $ 105,000, will have estimated benefits of $ 15,000 per year. No residual value is anticipated at the end of this project. For each of these projects, calculate the net present value this (NPV) and the internal rate of return (IRR). For your answers, please complete the following table: NPV (13%) IRR A B C D E
Expert Answer:
Answer rating: 100% (QA)
To calculate the net present value NPV and internal rate of return IRR for each project we can use t... View the full answer
Posted Date:
Students also viewed these economics questions
-
A balanced delta connected load is supplied from a 220V, 60Hz source thru a line with an impedance of 0.5 + j0.8 ohm. If the power consumed by the load is 3 KW at 0.8 power factor leading. Determine...
-
A branch voltage in an RLC circuit is described by If the initial conditions are v(0) = 0 = dv(0)/ dt , find v(t). + 4 +81-14
-
A 60-? lossless line terminated by load ZL has a voltage wave as shown in figure. Find s, F, and ZL. 4 V 25 20 15 10 5 50 45 40 35 30 Z, = 60N
-
Carl contributes equipment with a $50,000 adjusted basis and an $80,000 FMV to Cook Corporation for 50 of its 100 shares of stock. His son, Carl Jr., contributes $20,000 cash for the remaining 50...
-
1. Ricki goes to a baseball game. The back of her ticket clearly reads: "Fan agrees to hold team blameless for all injuries pay attention to the game at all times for your own safety!" In the first...
-
Sketch a graph of f. f(x) = x - 3
-
Assume your U.S. firm currently exports to Mexico on a monthly basis. The goods are priced in pesos. Once material is received from a source, it is quickly used to produce the product in the United...
-
The trial balance of Roman Company at the end of its fiscal year, August 31, 2014, includes these accounts: Inventory $17,200; Purchases $149,000; Sales Revenue $190,000; Freight-In $5,000; Sales...
-
ETHICAL DILEMMA ACCOUNTING ESTIMATES Companies are often under pressure by many (stockholders, creditors, etc.) to show the largest Net Income (Profits) as possible. Such pressure may cause some...
-
I attached the entire code but the only parts that need to be fixed are the def calc_movie_feature_matrix in class ContentBased, calc_item_item_similarity in class ContentBased, and predict_from_sim...
-
Excel Online Structured Activity: TIE ratio MPI Incorporated has $4 billion in assets, and its tax rate is 35%. Its basic earning power (BEP) ratio is 11%, and its return on assets (ROA) is 3%. The...
-
What Communication Barrier Is Described In This Situation? O Lack Of Language Skills O Distractions Differing Frames Of Reference How Might You Overcome This Communication Barrier In The Future? O Be...
-
Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides estimates concerning the company's costs: Cleaning supplies...
-
Roy & Roy, CPAs currently provides tax return preparation services to individuals in the local community. Roy has received a one-time only request to prepare 100 tax returns for clients of another...
-
What is management fraud? What could be the impact / consequence of management fraud to the company?
-
Why is audience analysis crucial in business writing? Describe a scenario where failure to consider the audience led to miscommunication or confusion .
-
Machine-hours Fixed manufacturing overhead costs. Variable manufacturing overhead cost per machine-hour Molding Fabrication 24,000 33,000 Total 57,000 $1,000,000 1.00 $760,000 $ 240,000 5.00 $ During...
-
Nate prepares slides for his microscope. In 1 day he prepared 12 different slides. Which equation best represents y, the total number of slides Nate prepares in x days if he continues at this rate? A...
-
Distinguish among the three types of responsibility
-
Using the information in E7-1, assume that in July 2002, Voss Company incurs the following manufacturing overhead costs. Instructions (a) Prepare a flexible budget performance report, assuming that...
-
Samano Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from \($170,000\) to \($200,000\). Variable costs and their percentage relationship to sales...
Study smarter with the SolutionInn App