Charlie has a project for which he had determined a presentworth of $56, 159. He now has to calculate the IRR forthe project, but unfortunately he has lost complete informationabout the cash flows. He knows only that the project has afive-year service life and a first cost of $180,000, that a set ofequal cash flows occurred at the end of each year, and that theMARR used was 10 percent. What is the IRR for this project?

The objective of this question is to calculate the Internal Rate of Return (IRR) for a project given…

Answered: Charlie has a project for which he had…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Charlie has a project for which he had determined a present worth $56,920. He now has to calculate the IRR for the project, but unfortunately, he has lost complete information about the cash flows. He knows only that the project has a five-year service life and the first cost of $200,000, that a set of equal cash flows occurred at the end of each year, and that the MARR used was 10 percent. What is the IRR for this project?
A 3-year project requires the purchase of a machine (fixed asset) for $6,000 in Year 0. In Year 2, the project is expected to have net income of $2,000 and the depreciation rate is 45%. The tax rate is 35%. There is no interest expense. What is the Operating Cash Flow in Year 2? Enter your answer without the dollar sign and round your final answer to the nearest whole number (nearest dollar).
Margaret has a project with a $30560 first cost that returns $4320 per year over its 10-year life. It has a salvage value of $3000 at the end of 10 years. If the MARR is 5 percent, what is the payback period of this project if cash flow is continuous?
National Integrated Systems (NIS), a global provider of heating and air conditioning is planning a project whose data is provided below. The project’s equipment has a 3 year tax life after which its salvage value will be zero. The machinery will be depreciated on a straight line basis over three years. Revenues and other operating costs are expected to be constant over the project’s life. What is the project’s cash flow in Year 1? Equipment Cost = $130,000Depreciation rate = 33.33%Annual Sales Revenue= $120,000Operating Costs (ex Depreciation) = $50,000 Tax Rate = 35%
A project that provides annual cash flows of $12,600 for 12 years costs $65,000 today. At what rate would you be indifferent between accepting the project and rejecting it? Answer with Excel functions
Pam's Company estimates the following cash flows and depreciation on a project that will cost $200,000 and will last 10 years with no salvage value: Sales revenue $80,000 Salary expense $32,000 Depreciation expense 20,000 Miscellaneous expenses 8,000 Net Income $20,000 Instructions (a) Calculate the expected annual rate of return on this project showing calculations to support your answer. (b) Calculate the cash payback on this project showing calculations to support your answer.
A project with an initial cost of $81,000 is expected to produce cash flows of $20,000 per year and net income of $9,000 for each of the next 7 years. The asset has an estimated 7-year life and a $4,000 salvage value. What is the projected payback period? From what I read, answer is supposed to be initial cost divided by cashflows per year but all the other data in the question is confusing me. Please help if possible. Thank you.
The Sampson Company is considering a project that requires an initial outlay of $75,000 and produces cash inflows of $20,806 each year for five years. Sampson's cost of capital is 10%. Calculate the project's IRR recognizing the fact that the cash inflows are an annuity. Is the project acceptable? Did your calculation in this part result in any number(s) that were also calculated in part a? What is it about this problem that creates this similarity? Will this always happen in such cases? What is the project's NPV? Is it acceptable according to NPV rules?
An investment project provides cash inflows of $735 per year for eight years. a. What is the project payback period if the initial cost is $1,950? (Enter 0 if the project never pays back. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the project payback period if the initial cost is $3,800? (Enter 0 if the project never pays back. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the project payback period if the initial cost is $5,900? (Enter 0 if the project never pays back. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Mountain Frost is considering a new project with an initial cost of $180,000. The equipment will be depreciated on a straight-line basis to a zero book value over the four-year life of the project. The projected net income for each year is $19,500, $20,400, $24,600, and $16,400, respectively. What is the average accounting return?
Cullumber Company is considering a long-term investment project called ZIP. ZIP will require an investment of $127,040. It will have a useful life of 4 years and no salvage value. Annual cash inflows would increase by $80,000, and annual cash outflows would increase by $40,300. Compute the cash payback period. (Round answer to 2 decimal places, e.g. 10.52.) Cash payback period years.
An investment project provides cash inflows of $660 per year for eight years. a. What is the project payback period if the initial cost is $1,525? (Enter O if the project never pays back. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the project payback period if the initial cost is $3,350? (Enter O if the project never pays back. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the project payback period if the initial cost is $5,500? (Enter O if the project never pays back. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Payback period b. Payback period c. Payback period years years years

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