Healthcare Clinic is evaluating a Capital Budgeting project that costs $52,125 and has expected net cash...

Healthcare Clinic is evaluating a Capital Budgeting project that costs $52,125 and has expected net cash flows of $12,000 per year for eight years. The first inflows occur one year after the cost outflow and the project has a cost of capital of 12 percent.

Below is a table of cash flows for the Capital Budget project:

Year	Annual Cash Flow	Cumulative Cash Flow
0	-$52,125	-$52,125
1	$12,000	-$40,125
2	$12,000	-$28,125
3	$12,000	-$16,125
4	$12,000	-$4,125
5	$12,000	$7,875
6	$12,000	$19,875
7	$12,000	$31,875
8	$12,000	$43,875

Please show your work for entering info in excel

What is the project's payback

What is the project's NPV

What is the IRR

Is the project financially acceptable? Explain your answer.

Solutions

Expert Solution

i have posted complete answer as well as picture for the excel formula..


Year	Annual Cash Flow	Cumulative Cash Flow
0	($52,125)	($52,125)
1	$12,000	($40,125)
2	$12,000	($28,125)
3	$12,000	($16,125)
4	$12,000	($4,125)
5	$12,000	$7,875
6	$12,000	$19,875
7	$12,000	$31,875
8	$12,000	$43,875

Payback period =		5.34	year

NPV =		$7,486.68
IRR =		16.00%
Project has positive NPV and also IRR is higher then required rate therefore project should be accepted

jeff jeffy answered 1 month ago

Next > < Previous

Related Solutions

Cox Healthcare Clinic is evaluating a Capital Budgeting project that costs $52,125 and has expected net...

Cox Healthcare Clinic is evaluating a Capital Budgeting project that costs $52,125 and has expected net cash flows of $12,000 per year for eight years. The first inflows occur one year after the cost outflow and the project has a cost of capital of 12 percent. Below is a table of cash flows for the Capital Budget project: Year Annual Cash Flow Cumulative Cash Flow 0 -$52,125 -$52,125 1 $12,000 -$40,125 2 $12,000 -$28,125 3 $12,000 -$16,125 4 $12,000 -$4,125...

Winston Clinic is evaluating a project that costs $52,125 and has expected net cash inflows of...

Winston Clinic is evaluating a project that costs $52,125 and has expected net cash inflows of $12,000 per year for eight years. The first inflow occurs one year after the cost outflow, and the project has a cost of capital of 12 percent. a. What is the project’s payback? b. What is the project’s NPV? Its IRR? Its MIRR? c. Is the project financially acceptable? Explain your answer.

Winston Clinic is evaluating a project that costs $50,000 and has expected net cash inflows of...

Winston Clinic is evaluating a project that costs $50,000 and has expected net cash inflows of $12,000 per year for eight years. The first inflow occurs one year after the cost outflow, and the project has a cost of capital of 12%. 1. What is the project’s NPV? 2. What is the project’s IRR? 3. What is the project’s MIRR? The director of capital budgeting for Big Sky Health System, Inc. has estimated the following cash flows for a new...

Winston Clinic is evaluating a project that costs $50,000 and has expected net cash inflows of...

Winston Clinic is evaluating a project that costs $50,000 and has expected net cash inflows of $12,000 per year for eight years. The first inflow occurs one year after the cost outflow, and the project has a cost of capital of 12%. What is the project’s MIRR? (hint: remember to put the answer as a percentage). Choice: 13.9% Choice: 14.5% Choice: 5.80% Choice: 22.1%

Evaluating a capital budgeting project that costs $40,000 that is expected to generate after-tax cash flows...

Evaluating a capital budgeting project that costs $40,000 that is expected to generate after-tax cash flows of $15,000 per year for three years. If the required rate of return is 10 percent calculate the project’s (a) NPV and (b) IRR. Should the project be purchased? This is for a review Please show steps and rationale for project purchase.

Project B costs $52,125. The project’s cash revenues are expected to be $12,000 per year for...

Project B costs $52,125. The project’s cash revenues are expected to be $12,000 per year for 5 years. If the WACC is 12%, what is the project's simple payback period? 0.23 years 2.22 years 4.34 years 5.94 years 10.01 years

You are evaluating a capital budgeting project for your company that is expected to last for...

You are evaluating a capital budgeting project for your company that is expected to last for six years. The project begins with the purchase of a $1,200,000 investment in equipment. You are unsure what method of depreciation to use in your analysis, straight-line depreciation or the 5-year MACRS accelerated method. Straight-line depreciation results in the cost of the equipment depreciated evenly over its life. The 5-year MACRS depreciation rates are 20%, 32%, 19%, 12%, 11%, and 6%. Your company's WACC...

DISCOUNTED PAYBACK Project K costs $52,125, its expected cash inflows are $12,000 per year for 8...

DISCOUNTED PAYBACK Project K costs $52,125, its expected cash inflows are $12,000 per year for 8 years, and its WACC is 12%. What is the project's discounted payback? Round to TWO decimal places. Answer:

If Company XYZ plans to invest in a project with initial capital outlay $52,125, annual net...

If Company XYZ plans to invest in a project with initial capital outlay $52,125, annual net cash inflow $12,000 for 8 years, and discount rate 12%, what is the Company XYZ’s NPA, IRR, MIRR, Payback period, and Discounted Payback Period?

1. A corporation is evaluating the relevant cash flows for a capital budgeting project involving expansion...

1. A corporation is evaluating the relevant cash flows for a capital budgeting project involving expansion of the firm’s activities and must estimate the terminal cash flow for the project. The project will involve purchasing a machine for $120,000. The machine has a usable life of 6 years but would be disposed of after 5 years at an estimated sale price of $10,000. The machine will be depreciated under the prime cost (straight-line) method supposing a 6-year life. Net working...

Subjects