Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project are as follows: Year 1 2 3 4 5 Total Plant Expansion $110,000 90,000 78,000 70,000 22,000 $370,000 Retail Store Expansion $92,000 108,000 74,000 52,000 44,000 $370,000 Each project requires an investment of $200,000. A rate of 20% has been selected for the net present value analysis. Present Value of $1 at Compound Interest 6% 10% 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 Year 1 2 3 4 5 6 7 8 W 9 10 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 15% 0.870 0.756 0.658 0.572 0.497 0,432 0.376 0.327 0.284 0.247 20% 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 D Required: 1a. Compute the cash payback period for each project. 1b. Compute the net present value. Use the present value of $1 table above. If required, round to the nearest dollar. L Plant Expansion Retail Store Expansion Total present value of net cash flow Less amount to be invested Net present value 2. Because of the timing of the receipt of the net cash flows, the offers a higher Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project are as follows: Year 1 2 3 4 5 Total Plant Expansion $110,000 90,000 78,000 70,000 22,000 $370,000 Retail Store Expansion $92,000 108,000 74,000 52,000 44,000 $370,000 Each project requires an investment of $200,000. A rate of 20% has been selected for the net present value analysis. Present Value of $1 at Compound Interest 6% 10% 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 Year 1 2 3 4 5 6 7 8 W 9 10 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 15% 0.870 0.756 0.658 0.572 0.497 0,432 0.376 0.327 0.284 0.247 20% 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 D Required: 1a. Compute the cash payback period for each project. 1b. Compute the net present value. Use the present value of $1 table above. If required, round to the nearest dollar. L Plant Expansion Retail Store Expansion Total present value of net cash flow Less amount to be invested Net present value 2. Because of the timing of the receipt of the net cash flows, the offers a higher
Expert Answer:
Answer rating: 100% (QA)
To compute the cash payback period for each project we need to determine how long it takes for the c... View the full answer
Related Book For
Financial and Managerial Accounting Using Excel for Success
ISBN: 978-1111993979
1st edition
Authors: James Reeve, Carl S. Warren, Jonathan Duchac
Posted Date:
Students also viewed these accounting questions
-
Celebration Apparel Inc. is considering two investment projects. The estimated net cash flows from each project are as follows: Each project requires an investment of $ 750,000. A rate of 15% has...
-
Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project are as follows: Each project requires an investment of $900,000. A rate of 15% has been...
-
Unique Boutique Inc. is considering two investment projects. The estimated net cash flows from each project are as follows: Each project requires an investment of $770,000. A rate of 15% has been...
-
1. Johnathan's utility for money is given by the exponential function: U(X)-4-4*100). a. Based on his utility function, what is his risk-odds for the S+/-1 deal, r($1)? b. Is Johnathan a deltaperson?...
-
Suppose that X and Y are independent, continuous uniform random variables for 0 < x < 1 and 0 < y < 1. Use the joint probability density function to determine the probability that
-
Which method?Grignard carboxylation or nitrile hydrolysis?would you use for each of the following reactions? Explain. " - C CH2Br (a) " CH Br (b) CH3CH2CHCO2H CCH2CHCH3 (c) CHH-H2H2, CHH-H-CH21...
-
Suppose Peters Hardware sells merchandise on account, terms 2/10, n/45, for $750 (cost of the inventory is $460) on May 17, 2010. Peters Hardware later received $225 of goods (cost, $140) as sales...
-
Create a time-phased resource-loading table for this project, identifying the activity early start and late finish points. Consider a project with the following information: Activitv Duration...
-
Our case is set in the largest and most productive division of a Fortune 500 Corporation.The corporation produces a myriad of products that it supplies to U.S and foreign governments plus some...
-
? ? Please complete the 2019 federal income tax return for Joseph and Diana Cohen. Ignore the requirement to attach the form(s) W-2 to the front page of the Form 1040. If required information is...
-
A survey of 125 freshmen business students at a local university produced the results listed below. How many students took only music? 30 took English; 33 took math; 32 took music; Answer How to...
-
Assume a polluting firm is risk averse and sufficiently wealthy such that bankruptcy is not an issue (i.e. ya*D>>0). (a) Show by examples that under strict liability a polluter may choose too small...
-
Using the home heating data, complete the following. (a) Estimate a model that includes only the installation and operating cost variables, and check that you are able to replicate the estimates...
-
Consider the probability functions p(a)= min{1/a,1} and p(a)=1+a(a-2).Calculate the socially optimal levels of care for the simple model outlined in section 10.1. Data from section 10.1] Consider a...
-
Consider an abatement cost function of the type where 0 (a) Determine the socially optimal allocation. (b) Determine the socially optimal policy mix, including optimal levels. (c) Now assume the...
-
Repeat exercise 12.1, but now use for the domestic utility function, and a corresponding expression for the foreign utility function. (a) What are the maximum consumption levels for z and z f ? (b)...
-
The balance sheet value of a firm's inventory is $55,000. Suppose that the firm purchases supplies at a cost of $4,500 and adds them to inventory. A day later, the market value of the recently...
-
The graph of the sequence whose general term is an = n - 1 is which of the following? [8.1] A. B. TITTT 3-2-1 23.45 2.3.4
-
Loom Industries, Inc., manufactures and sells a variety of commercial vehicles in the North and South regions. There are two salespersons assigned to each territory. Higher commission rates go to the...
-
Units of production data for the two departments of Continental Cable and Wire Company for May of the current fiscal year are as follows: Each department uses the average cost method. a. Determine...
-
Several items are omitted from each of the following income statement and cost of goods manufactured statement data for the month of December 2012: 1. Determine the amounts of the missing items,...
-
Consider the quarterly real GDP of United Kingdom, Canada, and the United States from the first quarter of 1980 to the second quarter of 2011. The data are available from the Federal Reserve Bank of...
-
Derive the error-correction form in Equation (5.68) for a \(\operatorname{VAR}(p)\) model. P-1 Azt = zt-p+Azti + c(t) + (B)at, i=1 (5.68)
-
Housing markets in the United States have been under pressure since the 2007 subprime financial crisis. In this problem, we consider the housing starts for the West and South regions of U.S. Census....
Study smarter with the SolutionInn App