#31 Nugent Communication Corp. is investing $9,365,000 in new technologies. The company expects significant benefits in...
#31 Nugent Communication Corp. is investing $9,365,000 in new technologies. The company expects significant benefits in the first three years after installation (as can be seen by the following cash flows), and a constant amount for four more years. What is the discounted payback period for the project assuming a discount rate of 12 percent? Show all your work.
| 0 | -$9,365,000 |
| 1 | 2,265,433 |
| 2 | 4,558,721 |
| 3 | 3,378,911 |
| 4 | 1,150,000 |
| 5 | 1,150,000 |
| 6 | 1,150,000 |
| 7 | 1,150,000 |
Homework Answers
| Calculation of discounted payback period is shown below | |||||
| Year | Cash flow | Discount factor @ 12% | Present value | Cumulative cash flow | |
| 0 | -9365000 | 1.00000 | -$9,365,000 | -$9,365,000 | |
| 1 | 2265433 | 0.89286 | $2,022,708 | -$7,342,292 | |
| 2 | 4558721 | 0.79719 | $3,634,184 | -$3,708,107 | |
| 3 | 3378911 | 0.71178 | $2,405,042 | -$1,303,065 | |
| 4 | 1150000 | 0.63552 | $730,846 | -$572,220 | |
| 5 | 1150000 | 0.56743 | $652,541 | $80,321 | |
| 6 | 1150000 | 0.50663 | $582,626 | $662,947 | |
| 7 | 1150000 | 0.45235 | $520,202 | $1,183,149 | |
| Discounted payback period | 4 years + (572220/652541) | ||||
| Discounted payback period | 4.88 | ||||
| Thus, discounted payback period is 4.88 years | |||||
Add Answer to:
#31 Nugent Communication Corp. is investing $9,365,000 in new
technologies. The company expects significant benefits in...
Problem 10.20 Nugent Communication Corp. is investing $9,767,695 in new technologies. The company expects significant benefits...
Problem 10.20 Nugent Communication Corp. is investing $9,767,695 in new technologies. The company expects significant benefits in the first three years after installation (as can be seen by the following cash flows), and smaller constant benefits in each of the next four years Year Cash Flows $2,037,530 $4,519,516 $3,664,429 $986,000 What is the discounted payback period for the project assuming a discount rate of 10 percent? (Round answer to 2 decimal places, e.g. 15.25. If discounted payback period exceeds life...
Ivanhoe Communication Corp. is investing $10,191,900 in new technologies. The company’s management expects significant benefits in...
Ivanhoe Communication Corp. is investing $10,191,900 in new technologies. The company’s management expects significant benefits in the first three years after installation (as can be seen by the following cash flows), and smaller constant benefits in each of the next four years. Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy...
Problem 10.21 (Excel Video) Cullumber Communication Corp. is investing $8,975,700 in new technologies. The company's management...
Problem 10.21 (Excel Video) Cullumber Communication Corp. is investing $8,975,700 in new technologies. The company's management expects significant benefits in the first three years after installation (as can be seen by the following cash flows), and smaller constant benefits in each of the next four years. Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from...
What is the estimated payback period of a project whose cost is $90,000 and benefits estimated...
What is the estimated payback period of a project whose cost is $90,000 and benefits estimated to be $30,000 in each of the next five years? _________________ years If the cumulative net inflow for a project is ($500), and in the next year, inflows total $800 and outflows total $100, what is the cumulative net inflow at the end of the next year? Assuming a 10 percent discount rate, calculate the net present value (NPV) of the following cash flows...
10. Suppose your firm is considering investing in a project with the cash flows shown as...
10. Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are three and a half four and a half years. respectively. Use the payback decision to evaluate this project: should it be accepted or rejected? What is the payback period? Time -$5,000 1,300 S1.400 1.600...
(Discounted payback period) The Callaway Cattle Company is considering the construction of a new feed handling sys...
(Discounted payback period) The Callaway Cattle Company is considering the construction of a new feed handling system for its feed lot in Abilene, Kansas. The new system will provide annual labor savings and reduced waste totaling $195,000 while the initial investment is only $490,000. Callaway's management has used a simple payback method for evaluating new investments in the past but plans to calculate the discounted payback to analyze the investment. Where the appropriate discount rate for this type of project...
McKenna Sports Authority is getting ready to produce a new line of gold clubs by investing...
McKenna Sports Authority is getting ready to produce a new line of gold clubs by investing $1.85 million. The investment will result in additional cash flows of $525,000, $827,500, and $1,200,000 over the next three years. What is the payback period for this project? Round to four decimal places.
NexxGen is a Pharmaceutical Company which is considering investing in a new production line of portable...
NexxGen is a Pharmaceutical Company which is considering investing in a new production line of portable electrocardiogram (ECG) machines for its clients who suffer from cardiovascular diseases. The company has to invest in equipment which costs $2,500,000 and falls within a MARCS depreciation of 5 years, and is expected to have a scrap value of $200,000 at the end of the project. Other than the equipment, the company needs to increase its cash and cash equivalents by $100,000, increase the...
Management of Franklin Mints, a confectioner, is considering purchasing a new jelly bean-making machine at a...
Management of Franklin Mints, a confectioner, is considering purchasing a new jelly bean-making machine at a cost of $353,558. They project that the cash flows from this investment will be $150,100 for the next seven years. If the appropriate discount rate is 14 percent, what is the IRR that Franklin Mints management can expect on this project? (Round answer to 2 decimal places, e.g. 5.25%.) Champlain Corp. management is investigating two computer systems. The Alpha 8300 costs $2,677,625 and will...
Jamaica Corp. is adding a new assembly line at a cost of $8.5 million. The firm...
Jamaica Corp. is adding a new assembly line at a cost of $8.5 million. The firm expects the project to generate cash flows of $2 million, $3 million, $4 million, and $5 million over the next four years. Its cost of capital is 16 percent. Net present value: What is the MIRR and should company add the new assembley line? 18.58%, no 18.57%, yes 18%, no 19.87%, no
Problem 10.20 Nugent Communication Corp. is investing $9,767,695 in new technologies. The company expects significant benefits in the first three years after installation (as can be seen by the following cash flows), and smaller constant benefits in each of the next four years Year Cash Flows $2,037,530 $4,519,516 $3,664,429 $986,000 What is the discounted payback period for the project assuming a discount rate of 10 percent? (Round answer to 2 decimal places, e.g. 15.25. If discounted payback period exceeds life...
Problem 10.21 (Excel Video) Cullumber Communication Corp. is investing $8,975,700 in new technologies. The company's management expects significant benefits in the first three years after installation (as can be seen by the following cash flows), and smaller constant benefits in each of the next four years. Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from...
10. Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are three and a half four and a half years. respectively. Use the payback decision to evaluate this project: should it be accepted or rejected? What is the payback period? Time -$5,000 1,300 S1.400 1.600...
(Discounted payback period) The Callaway Cattle Company is considering the construction of a new feed handling system for its feed lot in Abilene, Kansas. The new system will provide annual labor savings and reduced waste totaling $195,000 while the initial investment is only $490,000. Callaway's management has used a simple payback method for evaluating new investments in the past but plans to calculate the discounted payback to analyze the investment. Where the appropriate discount rate for this type of project...
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 11 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 11 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 11 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 11 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 11 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 11 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 11 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 11 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 11 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 11 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 11 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 11 months ago