Hyde Company is considering two capital investments. Both investments have an initial cost of $6,000,000 and...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Hyde Company is considering two capital investments. Both investments have an initial cost of $6,000,000 and total net cash inflows of $14,000,000 over 10 years. Hyde requires a 20% rate of return on this type of investment. Expected net cash inflows are as follows: (Click the icon to view the expected net cash inflows.) Read the requirements. Requirement 1. Use Excel to compute the NPV and IRR of the two plans. Which plan, if any, should the company pursue? (Use parentheses or a minus sign for a negative NPV. Round the NPV calculations to the nearest whole dollar and the IRR calculations to two decimal places, X.XX%.) The NPV (net present value) of Plan Alpha is $ The NPV (net present value) of Plan Beta is $ The IRR (internal rate of return) of Plan Alpha is $ The IRR (internal rate of return) of Plan Beta is $ Which plan, if any, should the company pursue? Based on the results above, the company should pursue Requirement 2. Explain the relationship between NPV ar The internal rate of return is the interest rate that makes tl rate of return and if the net present value is negative, the %. %. the company's required rate of return. s relationship and the company's required rate of return, are your answers as expected in Requirement 1? Why or why not? because the NPV is Plan Alpha Plan Beta OTTITOR OF FOR.. is of an investment and the IRR is the required rate of return. Thus, if an investment's net present value is positive, the internal rate of return is the required Based on the results above, the company should pursue Requirement 2. Explain the relationship between NPV and IRR. Based on this relationship The internal rate of return is the interest rate that makes the net present value of an investm rate of return and if the net present value is negative, the internal rate of return is because the NPV is and the IRR is the company's required rate of return. s required rate of return, are your answers as expected in Requirement 1? Why or why not? Thus, if an investment's net present value is positive, the internal rate of return is negative positive og ate of return. the required Based on the results above, the company should pursue Requirement 2. Explain the relationship between NPV and IRR. Based on this relationship and the company's require The internal rate of return is the interest rate that makes the net present value of an investment rate of return and if the net present value is negative, the internal rate of return is because the NPV is and the IRR is the required rate of re the company's required rate of return. greater than less than our answers as expected in Requirement 1? Why or why not? S, if an investment's net present value is positive, the internal rate of return is the required The internal rate of return is the interest rate that makes the net present value of an investment rate of return and if the net present value is negative, the internal rate of return is Based on this relationship and the company's required rate of return, are your answers as expec Based on the relationship described above, the internal rate of return and net present value calc the required rate of return. For Plan Beta, the net present value is and Thus, if an investment's net present value is positive, the internal rate of return is equal to zero. greater than the original cost. less than the sum of the cash inflows. ...G as expected. For Plan Alpha, the net present value is required rate of return. the required and the internal rate of return is Based on this relationship and the company's required rate of return, are your answers as expected in Requirement 1? Why or why not? Based on the relationship described above, the internal rate of return and net present value calculated in Requirement 1 for the two plans the required rate of return. For Plan Beta, the net present value is and the internal rate of return is Requirement 3. After further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recalculate the NP Enter any number in the edit fields and then continue to the next question. are as expected. For Plan Alpha, the net present value is te of return. are not and the internal rate of return is ch plan, if any, should the company pursue? (Use Excel to determine your answers. Use Based on the relationship described above, the internal rate of return and net present value calculated in Requirement 1 for the two plans and the internal rate of return is as expected. For Plan Alpha, the net present value is the required rate of return. For Plan Beta, the net present value is the required rate of return. Requirement 3. After further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recalculate the NPV and IRR. Which plan, if any, should the company pursue? (Us Enter any number in the edit fields and then continue to the next question. and the internal rate of return is negative positive ine your answers. Use Based on the relationship described above, the internal rate of return and net present value calculated in Requirement 1 for the two plans the required rate of return. For Plan Beta, the net present value is and the internal rate of return is greater than less than value) of Plan Alpha is $ further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recalculate the NPV and IRR. Which plan, if any, should the company pursue? (Use Excel to determine your answers. Use is sign for a negative NPV. Round the NPV calculations to the nearest whole dollar and the IRR calculations to two decimal places, X.XX%.) The NPV (net present value) of Plan Beta is $ as expected. For Plan Alpha, the net present value is the required rate of return. 11 and the internal rate of return is Based on the relationship described above, the internal rate of return and net present value calculated in Requirement 1 for the two plans and the internal rate of return is the required rate of return. For Plan Beta, the net present value is Requirement 3. After further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recal parentheses or a minus sign for a negative NPV. Round the NPV calculations to the nearest whole dollar and the IRR calcula The NPV (net present value) of Plan Alpha is $ as expected. For Plan Alpha, the net present value is the required rate of return. greater than less than and the internal rate of return is R. Which plan, if any, should the company pursue? (Use Excel to determine your answers. Use laces, X.XX%.) Requirement 3. After further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recalculate the NPV and IRR. Which plan, if any, should the company pursue? (Use Excel to determine your answers. Use parentheses or a minus sign for a negative NPV. Round the NPV calculations to the nearest whole dollar and the IRR calculations to two decimal places, X.XX%.) The NPV (net present value) of Plan Alpha is $ The NPV (net present value) of Plan Beta is $ The IRR (internal rate of return) of Plan Alpha is $ The IRR (internal rate of return) of Plan Beta is $ Which plan, if any, should the company pursue? %. %. OA. The company should not pursue either plan because the NPV is positive and the IRR is greater than the company's required rate of return for both plans. B. If the company has sufficient resources and the plans are not mutually exclusive, it should pursue both plans because the NPV is positive and the IRR is greater than the company's required rate of return for both plans. If the company must choose only one plan, it should pursue Plan Beta because it has the higher NPV and IRR. C. If the company has sufficient resources and the plans are not mutually exclusive, it should pursue both plans because the NPV is positive and the IRR is greater than the company's required rate of return for both plans. If the company must choose only one plan, it should pursue Plan Alpha because it has the lower NPV and IRR. O D. The company should not pursue either plan because the NPV is negative and the IRR is less than the company's required rate of return for both plans. Hi Data Table Year Plan Alpha 1 2 3 4 5 6 LO 7 8 9 10 Total $ Plan Beta $ 1,400,000 $ 1,400,000 1,400,000 1,800,000 1,400,000 2,200,000 1,400,000 1,800,000 1,400,000 1,400,000 1,400,000 700,000 1,400,000 600,000 1,400,000 500,000 1,400,000 400,000 1,400,000 3,200,000 14,000,000 $ 14,000,000 Print x Done Hyde Company is considering two capital investments. Both investments have an initial cost of $6,000,000 and total net cash inflows of $14,000,000 over 10 years. Hyde requires a 20% rate of return on this type of investment. Expected net cash inflows are as follows: (Click the icon to view the expected net cash inflows.) Read the requirements. Requirement 1. Use Excel to compute the NPV and IRR of the two plans. Which plan, if any, should the company pursue? (Use parentheses or a minus sign for a negative NPV. Round the NPV calculations to the nearest whole dollar and the IRR calculations to two decimal places, X.XX%.) The NPV (net present value) of Plan Alpha is $ The NPV (net present value) of Plan Beta is $ The IRR (internal rate of return) of Plan Alpha is $ The IRR (internal rate of return) of Plan Beta is $ Which plan, if any, should the company pursue? Based on the results above, the company should pursue Requirement 2. Explain the relationship between NPV ar The internal rate of return is the interest rate that makes tl rate of return and if the net present value is negative, the %. %. the company's required rate of return. s relationship and the company's required rate of return, are your answers as expected in Requirement 1? Why or why not? because the NPV is Plan Alpha Plan Beta OTTITOR OF FOR.. is of an investment and the IRR is the required rate of return. Thus, if an investment's net present value is positive, the internal rate of return is the required Based on the results above, the company should pursue Requirement 2. Explain the relationship between NPV and IRR. Based on this relationship The internal rate of return is the interest rate that makes the net present value of an investm rate of return and if the net present value is negative, the internal rate of return is because the NPV is and the IRR is the company's required rate of return. s required rate of return, are your answers as expected in Requirement 1? Why or why not? Thus, if an investment's net present value is positive, the internal rate of return is negative positive og ate of return. the required Based on the results above, the company should pursue Requirement 2. Explain the relationship between NPV and IRR. Based on this relationship and the company's require The internal rate of return is the interest rate that makes the net present value of an investment rate of return and if the net present value is negative, the internal rate of return is because the NPV is and the IRR is the required rate of re the company's required rate of return. greater than less than our answers as expected in Requirement 1? Why or why not? S, if an investment's net present value is positive, the internal rate of return is the required The internal rate of return is the interest rate that makes the net present value of an investment rate of return and if the net present value is negative, the internal rate of return is Based on this relationship and the company's required rate of return, are your answers as expec Based on the relationship described above, the internal rate of return and net present value calc the required rate of return. For Plan Beta, the net present value is and Thus, if an investment's net present value is positive, the internal rate of return is equal to zero. greater than the original cost. less than the sum of the cash inflows. ...G as expected. For Plan Alpha, the net present value is required rate of return. the required and the internal rate of return is Based on this relationship and the company's required rate of return, are your answers as expected in Requirement 1? Why or why not? Based on the relationship described above, the internal rate of return and net present value calculated in Requirement 1 for the two plans the required rate of return. For Plan Beta, the net present value is and the internal rate of return is Requirement 3. After further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recalculate the NP Enter any number in the edit fields and then continue to the next question. are as expected. For Plan Alpha, the net present value is te of return. are not and the internal rate of return is ch plan, if any, should the company pursue? (Use Excel to determine your answers. Use Based on the relationship described above, the internal rate of return and net present value calculated in Requirement 1 for the two plans and the internal rate of return is as expected. For Plan Alpha, the net present value is the required rate of return. For Plan Beta, the net present value is the required rate of return. Requirement 3. After further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recalculate the NPV and IRR. Which plan, if any, should the company pursue? (Us Enter any number in the edit fields and then continue to the next question. and the internal rate of return is negative positive ine your answers. Use Based on the relationship described above, the internal rate of return and net present value calculated in Requirement 1 for the two plans the required rate of return. For Plan Beta, the net present value is and the internal rate of return is greater than less than value) of Plan Alpha is $ further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recalculate the NPV and IRR. Which plan, if any, should the company pursue? (Use Excel to determine your answers. Use is sign for a negative NPV. Round the NPV calculations to the nearest whole dollar and the IRR calculations to two decimal places, X.XX%.) The NPV (net present value) of Plan Beta is $ as expected. For Plan Alpha, the net present value is the required rate of return. 11 and the internal rate of return is Based on the relationship described above, the internal rate of return and net present value calculated in Requirement 1 for the two plans and the internal rate of return is the required rate of return. For Plan Beta, the net present value is Requirement 3. After further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recal parentheses or a minus sign for a negative NPV. Round the NPV calculations to the nearest whole dollar and the IRR calcula The NPV (net present value) of Plan Alpha is $ as expected. For Plan Alpha, the net present value is the required rate of return. greater than less than and the internal rate of return is R. Which plan, if any, should the company pursue? (Use Excel to determine your answers. Use laces, X.XX%.) Requirement 3. After further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recalculate the NPV and IRR. Which plan, if any, should the company pursue? (Use Excel to determine your answers. Use parentheses or a minus sign for a negative NPV. Round the NPV calculations to the nearest whole dollar and the IRR calculations to two decimal places, X.XX%.) The NPV (net present value) of Plan Alpha is $ The NPV (net present value) of Plan Beta is $ The IRR (internal rate of return) of Plan Alpha is $ The IRR (internal rate of return) of Plan Beta is $ Which plan, if any, should the company pursue? %. %. OA. The company should not pursue either plan because the NPV is positive and the IRR is greater than the company's required rate of return for both plans. B. If the company has sufficient resources and the plans are not mutually exclusive, it should pursue both plans because the NPV is positive and the IRR is greater than the company's required rate of return for both plans. If the company must choose only one plan, it should pursue Plan Beta because it has the higher NPV and IRR. C. If the company has sufficient resources and the plans are not mutually exclusive, it should pursue both plans because the NPV is positive and the IRR is greater than the company's required rate of return for both plans. If the company must choose only one plan, it should pursue Plan Alpha because it has the lower NPV and IRR. O D. The company should not pursue either plan because the NPV is negative and the IRR is less than the company's required rate of return for both plans. Hi Data Table Year Plan Alpha 1 2 3 4 5 6 LO 7 8 9 10 Total $ Plan Beta $ 1,400,000 $ 1,400,000 1,400,000 1,800,000 1,400,000 2,200,000 1,400,000 1,800,000 1,400,000 1,400,000 1,400,000 700,000 1,400,000 600,000 1,400,000 500,000 1,400,000 400,000 1,400,000 3,200,000 14,000,000 $ 14,000,000 Print x Done
Expert Answer:
Answer rating: 100% (QA)
Year 0 1 Req 3 2 3 4 5 6 7 8 9 10 Plan Alpha Cash Flows 6000000 1400000 1400000 1400000 1400000 1400... View the full answer
Related Book For
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
Posted Date:
Students also viewed these accounting questions
-
How is compensation for services provided by an owner reported? Choose the option that accurately describes what is required for the situation as described. Jamil, a partner in ABC, will receive Form...
-
A wave of frequency 100 Hz is sent along a string towards a fixed end. When this wave travels back after reflection, a node is formed at a distance of 10 cm from the fixed end of the string. The...
-
Crowell Company is considering two capital investments. Both investments have an initial cost of $ 6,000,000 and total net cash inflows of $ 10,000,000 over 10 years. Crowell requires a 12% rate of...
-
Air temperature usually decreases with increasing altitude. However, during the winter, thanks to a phenomenon called thermal inversion, the temperature of air warmed by the sun in mountains above a...
-
Trenton worked on four jobs during its first year of operation: nos. 401, 402, 403, and 404. A review of job no. 403's cost record revealed direct material charges of $40,000 and total manufacturing...
-
The worksheet of Alec's Office Supplies contains the following revenue, cost, and expense accounts. Prepare a classified income statement for this firm for the year ended December 31, 2013. The...
-
As the manager of an Aunty Pasta Corporation restaurant, you must deal with a variety of business transactions. Requirement 1. Give an example of a transaction that has each of the following effects...
-
Because of rapidly advancing technology, Southern Publications Corporation is considering replacing its existing typesetting machine with leased equipment. The old machine, purchased two years ago,...
-
Questions 3. This is Stephanie's first home purchase. She is very happy with all of your advice and has made a decision on which loan option she would like to take. She now asks 'what happens from...
-
Gas absorption or gas scrubbing is a commonly used method for removing environmentally undesirable species from waste gases in chemical manufacturing and combustion processes. The waste gas is...
-
Write a brief paper on Multiculturalism in Education in which you need to address the following: Segregation in Schools Busing and Segregation "Separate but Equal" in Today's Classroom Individual...
-
1. Calculate the average power of infrared radiation emitted per square meter if there were these three surface temperatures. You can by simply using the Stefan-Boltzmann equation for each...
-
Describe the ray-tracing process in detail, covering the following sub-questions: what is ray-tracing and how does it differ from other rendering techniques? How are the rays drawn from the observer...
-
Exploring your basic assumptions about leadership. Answer the question, 'What does leadership mean to you?' In your answer address the following components: How would you define leadership? Do you...
-
The capacity of the hold in a cargo ship is 15,000 cubic meters. There are three different cargos for shipping x, y, and z. There is an infinite amount of each cargo available. The cargoes have the...
-
What security will he most likely be able to sell at the day? 2. At what price will the bank buy that security from him? 3. At what price will he be able to sell it to the bank? 4. At what...
-
You are given an investment option by a friend. They promise you if you give them $1,000 today, they will give your $1,207.95 three years from today.If this is the case, what is the interest rate you...
-
The text defined intrinsic value as the value of an asset given a hypothetically complete understanding of the assets investment characteristics. Discuss why hypothetically is included in the...
-
Precision Pics works weddings and prom-type parties. The balance of Retained Earnings was $26,000 at December 31, 2015. At December 31, 2016, the business'saccounting records show these balances:...
-
Refer to the Stenback Valley Snow Park Lodge expansion project in Short Exercise S26-4 and your calculations in Short Exercises S26-5 and S26-6. Assume the expansion has zero residual value....
-
Refer to Short Exercise S18-5. At Russia Spring, water is added at the beginning of the filtration process. Conversion costs are added evenly throughout the process. Now assume that in February,...
-
AMC Trade Mart has recently had lacklustre sales. The rate of inventory turnover has dropped, and the merchandise is gathering dust. At the same time, competition has forced AMC's suppliers to lower...
-
Chocolate Treats Ltd. and Coffee Bars Inc. are both specialty food chains. The two companies reported these figures, in thousands: {Requirements} 1. Compute the gross profit percentage and the rate...
-
Columbia Video Sales Ltd. reported the following data. The shareholders are very happy with Columbia's steady increase in net income. Auditors discovered that the ending inventory for 2018 was...
Study smarter with the SolutionInn App