Question
In: Finance
Rieger International is evaluating the feasibility of investing $90,000 in a piece of equipment that has...
Rieger International is evaluating the feasibility of investing
$90,000
in a piece of equipment that has a
55-year
life. The firm has estimated the cash inflows associated with the proposal as shown in the following table:
|
Year
(t) |
Cash inflows (CF) |
|
||||||||||
|
1 |
$20 comma 00020,000 |
|||||||||||
|
2 |
$25 comma 00025,000 |
|||||||||||
|
3 |
$35 comma 00035,000 |
|||||||||||
|
4 |
$30 comma 00030,000 |
|||||||||||
|
5 |
$30 comma 00030,000 |
|||||||||||
.
The firm has a
88%
cost of capital.
a. Calculate the payback period for the proposed investment.
b. Calculate the net present value (NPV) for the proposed investment.
c. Calculate the internal rate of return
(IRR),
rounded to the nearest whole percent, for the proposed investment.
d. Evaluate the acceptability of the proposed investment using NPV and IRR. What recommendation would you make relative to implementation of the project?
a. The payback period of the proposed investment is _____
years. (Round to two decimal places.)
b. The NPV of the proposed investment is $_____
(Round to the nearest cent.)
c. The IRR of the proposed investment is _____ %.
(Round to two decimal places.)
d. Should Rieger International accept or reject the proposed investment? (Select the best answer below.)
A.
Reject
B.
Accept
Solutions
jeff jeffy answered 6 months agoRelated Solutions
Rieger International is evaluating the feasibility of investing $94,000 in a piece of equipment that has...
Rieger International is evaluating the feasibility of investing
$94,000 in a piece of equipment that has a 5-year life. The firm
has estimated the cash inflows associated with the proposal as
shown in the following table:
1 $20,000
2 $25,000
3 $40,000
4 $40,000
5 $25,000
The firm has a 9% cost of capital.
a. Calculate the payback period for the proposed
investment.
b. Calculate the net present value (NPV) for the proposed
investment.
c. Calculate the internal rate of...
Payback, NPV, and IRR Rieger International is evaluating the feasibility of investing $95,000 in a piece...
Payback, NPV, and IRR Rieger International
is evaluating the feasibility of investing $95,000 in a piece of
equipment that has a 5-year life. The firm has estimated the cash
inflows associated with the proposal as shown in the following
table:
1 $40,000
2 $20,000
3 $35,000
4 $30,000
5 $30,000
. The firm has a
9%
cost of capital.
a. Calculate the payback period for
the proposed investment.
b. Calculate the net present value
(NPV) for the proposed investment.
c. ...
Payback, NPV, and IRR Rieger International is evaluating the feasibility of investing $86 comma 00086,000 in...
Payback, NPV, and IRR Rieger International is evaluating the
feasibility of investing
$86 comma 00086,000
in a piece of equipment that has a
55-year
life. The firm has estimated the cash inflows associated with
the proposal as shown in the following table:
LOADING...
.
The firm has a
99%
cost of capital.
a. Calculate the payback period for the proposed
investment.
b. Calculate the net present value (NPV) for the proposed
investment.
c. Calculate the internal rate of return
(IRR),...
Payback, NPV, and IRR Rieger International is attempting to evaluate the feasibility of investing $102,000 in...
Payback, NPV, and IRR Rieger International
is attempting to evaluate the feasibility of investing $102,000 in
a piece of equipment that has a 55-year life. The firm has
estimated the cash inflows associated with the proposal as shown in
the following table The firm has a 11% cost of capital.
Year (t) Cash inflows (CF)
1 $30k
2 $25k
3 $40k
4 $35k
5 $20k
a. Calculate the payback period for
the proposed investment.
b. Calculate the net present value...
A company is evaluating the feasibility of investing in machinery to manufacture an automotive component. It...
A company is evaluating the feasibility of investing in
machinery to manufacture an automotive component. It would need to
make an investment of $560,000 today, after which, it would have to
spend $7,500 every year starting one year from now, for ten years.
At the end of the period, the machine would have a salvage value of
$11,000. The company confirmed that it can produce and sell 7,500
components every year for ten years and the net return would be...
DT is evaluating an alternative for a new piece of equipment. They estimate the new equipment...
DT is evaluating an alternative for a new piece of equipment.
They estimate the new equipment will cost $164,000, last 4 years,
and have a maintenance and operation cost of $55,000 per year with
no salvage value. Using a MARR of 22% per year, what is the present
worth?
considering investing in a new piece of equipment that is expected to generate $30,000 of revenue...
considering investing in a new piece of equipment that is
expected to generate $30,000 of revenue the first year, increasing
15% per year for the 9 year useful life. The salvage value is
expected to be 20% of the initial investment. Using a MARR of 10%
and an equivalent worth method, determine the maximum your company
should pay for the equipment in order for this to be a satisfactory
investment.
a) Boulder Milling is evaluating a proposal to invest in a new piece of equipment costing...
a) Boulder Milling is evaluating a proposal to invest in a new
piece of equipment costing $160,000 (salvage value = $10,000) with
the following annual cash flows over the equipment's 4-year useful
life. There is an initial working capital payment of $50,000
required for this equipment.
Cash revenues
Cash expenses
Depreciation expenses (straight-line) Income provided from
equipment Cost of capital
Note: Depreciation is a non-cash expense
$120,000 (64,000) (20,000)
$36,000 12 percent
Periods
Present value of $1
8%
10%
12%...
In evaluating a piece of equipment for its optimum replacement interval, the following table of marginal...
In evaluating a piece of equipment for its optimum replacement
interval, the following table of marginal costs were calculated.
Year 1 2 3 4 5 MC(year1) $11,755 (year 2)$12,390 (year 3)$12,750
(year 4) $12,955 (YEAR 5)$13,425 The best available technology on
the market costs $30,000 with projected revenues of O&M of
$10,000 and O&M starting at $2500 and increasing $2000 per
year. If corporate MARR is 18%, what is your recommendation?
[year]
Harriman Manufacturing Company is evaluating the purchase of a new piece of equipment. The quoted price...
Harriman Manufacturing Company is evaluating the
purchase of a new piece of equipment. The quoted price is $50,000,
and it would cost Harriman another $ 10,000 for related capital
costs such as transportation and equipment modification for special
use. The total investment would fall into MACRS three year class
with depreciation rates being applied to the full capitalized costs
not excluding salvage at 33%, 45%, 15% and 7% in years 1-4,
respectively. Harriman expects that the equipment would be sold...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- If you wanted to store a birthday within code, what class would you use in Java?...
- Explain what is meant by the Theme Park internal and external business environment and use the...
- Description Write a program that prints out your name, the course ID of this class, what...
- A project has an initial cost of $65,475, expected net cash inflows of $12,000 per year...
- Make a program that lets the user enter a positive or negative integer as many times...
- using java, parse a text file to be able to list the word(s) with the highest...
- Consider the following linear programming problem: Maximize 10X + 8Y Subject to: 40X + 24Y <=...
ADVERTISEMENT