Question
Question #1 The following table indicates the net cash flows of a capital asset: Year Net Cash Flow 0 $8,400 1 $5,900 2 $6,200 Do
Question #1
The following table indicates the net cash flows of a capital asset:
Year  Net Cash Flow 
0  $8,400 
1  $5,900 
2  $6,200 
Do not enter dollar signs or commas in the input boxes. Use the negative sign where appropriate. Round the factor to 4 decimal places and the NPV to the nearest whole number. Assume the required rate of return is 15%. Determine the net present value of this asset.
Year  Net Cash Flow  Factor  Net Present Value 
0  $8,400  1
 $8400

1  $5,900  Answer ?  $Answer ? 
2  $6,200  Answer ?  $Answer ? 
Total  $Answer ? 
Question #2
Fill in the blanks for each of the following independent scenarios (AD).
Do not enter dollar signs or commas in the input boxes. Round all answers to the nearest whole number.
Scenario  A  B  C  D 
Annual Net Cash Flow  $13,000.00  $Answer ?  $11,000.00  $8,000.00 
Discount Rate  11%  7%  5%  6% 
Number of Payments  7  7  7
 2 
Present Value of Annuity Factor  4.7122  5.3893  5.7864  1.8334 
Present Value of Annuity  $61259
 $215,572.00  $63650
 $14,667.20 
Question #3
Two days ago, one of Morees Catering Inc.'s delivery vans stopped working. To meet demands, the company needs a new van. The company is deciding to either lease or purchase a new van. The company can lease the van from Leaselt Ltd. under a 4 year contract. The lease cost would be $11,200 per year. On the other hand, Morees can purchase a van from BuyIt Ltd. for $46,100. Assume Morees has a required rate of return of 9%.
Do not enter dollar signs or commas in the input boxes. Use the present value tables found in the textbook appendix. Round your answer to the nearest whole number. Use the NPV method to determine which alternative the company should accept. Lease Cost: $Answer ? Purchase Cost: $Answer ? Therefore, Morees should: Lease
Question #4
Harold Coop is considering investing in either ABC or ZYX. Both investments ABC and ZYX cost $17,000. In order to make the purchase, Harold Coop needs to obtain a loan from the bank at an interest rate of 4%. The bank is only willing to offer Harold Coop $17,000. The following table outlines the expected net cash flows from each investment.
Year  ABC  ZYX 
1  $700  $12,400 
2  $1,100  $3,200 
3  $3,200  $3,700 
4  $6,800  $1,500 
5  $9,700  $700 
Total  $21,500  $21,500 
Based on the NPV method, which investment should Harold Coop purchase? Do not enter dollar signs or commas in the input boxes. Use the negative sign for a negative NPV. Use the PV tables in the appendix of the textbook. Round your answers to the nearest whole number. NPV of Investment ABC: $Answer ? NPV of Investment ZXY: $Answer ? Better Investment: Answer ABCZYX
Question #5
Tippy Toe Spa Company offers various services, such as facials, laser hair removal and microdermabrasion. Currently, the company is considering purchasing the following spa equipment:
Laser Hair Removal Machines  Microdermabrasion Machines  Facial Oxygen Units  
Cost per Machine  $65,700  $31,900  $25,400 
Annual Cash Inflow  $124,300  $211,300  $39,700 
Annual Cash Outflow  $89,300  $195,800  $26,900 
Required Rate of Return  10%  13%  5% 
Useful Life  4 years  4 years  2 years 
Residual Value  $860  $830  $0 
Assume that each equipment's annual cash flow will occur for the period equal to its useful life. Do not enter dollar signs or commas in the input boxes. Use the present values tables in the textbook appendix. Use the negative sign for negative values. Round your answers to the nearest whole number. a) Determine the NPV of each piece of equipment. Laser Hair Removal Machine: $Answer ? Microdermabrasion Machine: $Answer ? Facial Oxygen Unit: $Answer ? b) For each piece of equipment, determine the maximum acceptable price using the NPV method. Laser Hair Removal Machine: $Answer ? Microdermabrasion Machine: $Answer ? Facial Oxygen Unit: $Answer ? c) Determine the payback period for each piece of equipment. Round your answers to 1 decimal place. Laser Hair Removal Machine: Answer Years ? Microdermabrasion Machine: Answer Years ? Facial Oxygen Unit: Answer Years ?
Question #6
The Georgio Hotel Corporation is considering replacing its old hot tub with a new one at a cost of $26,000. With the new hot tub, the company expects to save $5,000 in maintenance costs per year, all cash savings. These savings in maintenance costs represent both an increase in cash flow and an increase in incremental operating income. The new hot tub has an estimated useful life of 5 years with no residual value. The company's required rate of return is 6%. The old hot tub has no residual value.
Do not enter dollar signs or commas in the input boxes. Use the present value tables found in the textbook appendix. Use the negative sign for negative values. Round all answers to 2 decimal places. a) Assume the company wants to recover their initial investment on the new hot tub in five years. Based on the payback method, should the hotel purchase the new hot tub? Cash Payback Period: Answer 5.2 years Should the hotel purchase the new hot tub?: Answer No
b) If the ARR method is used, should Georgio Hotel purchase the new hot tub? ARR: Answer 38.46% Should the hotel purchase the new hot tub?: Answer Yes
c) If the NPV technique was used, should Georgio Hotel purchase the new hot tub? Round your answer to the nearest whole number. NPV: $Answer ? Should the hotel purchase the new hot tub?: Answer No
Step by Step Solution
3.36 Rating (162 Votes )
There are 3 Steps involved in it
Step: 1
lets go through the questions one by one Question 1 Year Net Cash FlowFactorNet Present Value 084001...Get Instant Access to ExpertTailored Solutions
See stepbystep solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AIdriven, stepbystep assistance
Get Started