Cato Springs Chemicals International, a batch chemical processing company, is considering acquiring new technology in order...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Cato Springs Chemicals International, a batch chemical processing company, is considering acquiring new technology in order to enter a new specialty chemicals market. Three suppliers (A, B, and C) of specially designed centrifuges and associated equipment are under consideration. Depending on which supplier is chosen, slightly different markets will be pursued. The forecasts of net cash flows over a 10-year planning horizon for the three alternatives are given below. EOY CF(A) CF(B) CF(C) $10,520,900 $6,965,300 $8,808,300 1 -$1,320,600 -$721,200 $1,127,300 $3,336,600 $2,125,800 $2,794,000 $3,590,900 $2,361,500 $3,030,900 4 $3,834,400 $2,644,700 $3,286,000 $3,986,400 $2,699,800 $3,471,000 $4,204,000 $2,783,500 $3,792,800 7 $4,504,300 $2,908,400 $3,952,200 8 $4,669,200 $3,150,000 $4,003,700 9. $5,150,200 $3,978,200 $5,423,300 10 $9,625,600 $5,385,700 $8,584,900 Part a Perform an internal rate of return analysis to which, if any, of the mutually exclusive investments should be pursued, using a minimum attractive rate of return of 15%. * should be calculated first: IRR = %. Therefore, it * acceptable. Next, + should be calculated: IRR = %. Therefore, it * acceptable. Next, * should be calculated: IRR = %. Therefore, it + acceptable. Round entries to 2 decimal places. The tolerance is ±0.02. Thus, * is preferred. Cato Springs Chemicals International, a batch chemical processing company, is considering acquiring new technology in order to enter a new specialty chemicals market. Three suppliers (A, B, and C) of specially designed centrifuges and associated equipment are under consideration. Depending on which supplier is chosen, slightly different markets will be pursued. The forecasts of net cash flows over a 10-year planning horizon for the three alternatives are given below. EOY CF(A) CF(B) CF(C) $10,520,900 $6,965,300 $8,808,300 1 -$1,320,600 -$721,200 $1,127,300 $3,336,600 $2,125,800 $2,794,000 $3,590,900 $2,361,500 $3,030,900 4 $3,834,400 $2,644,700 $3,286,000 $3,986,400 $2,699,800 $3,471,000 $4,204,000 $2,783,500 $3,792,800 7 $4,504,300 $2,908,400 $3,952,200 8 $4,669,200 $3,150,000 $4,003,700 9. $5,150,200 $3,978,200 $5,423,300 10 $9,625,600 $5,385,700 $8,584,900 Part a Perform an internal rate of return analysis to which, if any, of the mutually exclusive investments should be pursued, using a minimum attractive rate of return of 15%. * should be calculated first: IRR = %. Therefore, it * acceptable. Next, + should be calculated: IRR = %. Therefore, it * acceptable. Next, * should be calculated: IRR = %. Therefore, it + acceptable. Round entries to 2 decimal places. The tolerance is ±0.02. Thus, * is preferred.
Expert Answer:
Answer rating: 100% (QA)
MARR 15 If IRR MARR project should be accepted IRR should be calculated first I... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
The McPherson Company is considering acquiring the McAlester Company. Selected financial data for the two companies are shown here: Both companies have 40 percent marginal tax rates. Assume that no...
-
A manufacturing company is considering acquiring a new injection-molding machine at I cost of $120,000. Because of a rapid change in product mix, the need for this particular machine is expected to...
-
A food processing company is considering two types of moisture analyzers. Only one can be selected. The company expects an infrared model to yield a rate of return of 27% per year. A more expensive...
-
Modify BST to add a method size() that returns the number of key-value pairs in the symbol table. Use the approach of storing within each Node the number of nodes in the subtree rooted there.
-
Verry Corporation owns 75 percent of Spawn Corporations voting common stock. Verry reported income from its separate operations of $90,000 and $110,000 in 20X4 and 20X5, respectively. Spawn reported...
-
Explain why the fixed overhead spending variance is usually very small.
-
Gemini manufactures athletic shoes. The company records manufacturing costs by job number and uses a factory overhead applied rate to charge overhead costs to its products. The company estimates...
-
Robert A. Putnam, an engagement partner for Arthur Andersen LLP, was in charge of the audit for HBOC, an Atlanta-based maker of software for the healthcare industry, during the period 1996-1999. HBOC...
-
iv. ( ) would be the probability of a number being even, prime, and a multiple of 3. There is only one such number, 2, so this probability is 1/26 0.04. 2 is not a prime
-
a. Use a spreadsheet (or a calculator with a linear regression function) to determine Stock X's beta coefficient. b. Determine the arithmetic average rates of return for Stock X and the NYSE over the...
-
A high-speed flywheel in a motor is spinning at 50 rads/sec when the power suddenly fails. The power is off for 40 seconds and the flywheel slows due to the friction in the axle. While the power is...
-
Value the firm using the discounted cash flows method (includes building a forecast and calculating the discount rat Facebook Income Statement (in millions, except per share data) Revenue Costs and...
-
Refer to Allucent website, https://allucent.io, and work on Research effective marketing materials Develop key marketing messages Identify effective marketing materials to develop
-
A typical lightbulb in your house is rated 50 W, which means that the bulb dissipates 50 W when connected to a DC voltage of 115 V. (a) What is the current through the lightbulb? (b) If the voltage...
-
A hockey puck is coming towards a hockey player at a velocity of 13 m/s [E]. The player hits the puck with her hockey stick, and the puck leaves her stick with a velocity of 17 m/s [W]. The puck was...
-
A steam supply line provides steam at 600 F and 300 psia. (1) Determine the mass and the temperature of the steam in an insulated piston-cylinder arrangement if sufficient steam is admitted to...
-
1. [Maximum The front view of a doghouse is made up of a square with an isosceles triangle on top. The doghouse is 1.35 m high and 0.9 m wide, and sits on a square base. Rindal 1.35 0.9 0.9 diagram...
-
The liquidliquid extractor in Figure 8.1 operates at 100F and a nominal pressure of 15 psia. For the feed and solvent flows shown, determine the number of equilibrium stages to extract 99.5% of the...
-
A copper rod 85 cm long is used to poke a fire. The hot end of the rod is maintained at 115 C and the cool end has a constant temperature of 22C. What is the temperature of the rod 25 cm from the...
-
A cylindrical container 1.0 m tall contains mercury to a certain depth, d. The rest of the cylinder is filled with water. If the pressure at the bottom of the cylinder is two atmospheres, what is the...
-
Playing shortstop, you pick up a ground ball and throw it to second base. The ball is thrown horizontally, with a speed of 18 m/s, directly toward point A (FIGURE 4-19). When the ball reaches the...
-
Modify the spread sheet to handle development costs.
-
What is a What if analysis?
-
You developed an overhead budget for a construction company. Historically, the companys construction costs are 89% of revenues. What volume of work does the construction company need to achieve in...
Study smarter with the SolutionInn App