Question
In: Accounting
Net Present Value For discount factors use Exhibit 12B-1 and Exhibit 12B-2. Talmage Inc. has just...
Net Present Value
For discount factors use Exhibit 12B-1 and Exhibit 12B-2.
Talmage Inc. has just completed development of a new printer. The new product is expected to produce annual revenues of $2,700,000. Producing the printer requires an investment in new equipment costing $2,880,000. The printer has a projected life cycle of 5 years. After 5 years, the equipment can be sold for $360,000. Working capital is also expected to decrease by $360,000, which Talmage will recover by the end of the new product’s life cycle. Annual cash operating expenses are estimated at $1,620,000. The required rate of return is 8%.
Required:
1. Prepare a schedule of the projected annual cash flows.
| Year | Item | Cash Flow | ||
| 0 | $ | |||
| Total | $ | |||
| 1–4 | $ | |||
| Total | $ | |||
| 5 | $ | |||
| Total | $ |
2. Calculate the NPV using only discount
factors from Exhibit 12B.1
$
3. Calculate the NPV using discount factors
from both Exhibits 12B.1 and 12B.2
$
Solutions
ekkarill92 answered 1 month agoRelated Solutions
Net Present Value and Competing Projects For discount factors use Exhibit 12B.1 and Exhibit 12B.2. Spiro...
Net Present Value and Competing Projects
For discount factors use Exhibit 12B.1 and Exhibit 12B.2.
Spiro Hospital is investigating the possibility of investing in
new dialysis equipment. Two local manufacturers of this equipment
are being considered as sources of the equipment. After-tax cash
inflows for the two competing projects are as follows:
Year
Puro Equipment
Briggs Equipment
1
$320,000
$120,000
2
280,000
120,000
3
240,000
320,000
4
160,000
400,000
5
120,000
440,000
Required:
Round present value calculations and your final...
Net Present Value and Competing Projects For discount factors use Exhibit 12B.1 and Exhibit 12B.2. Spiro...
Net Present Value and Competing Projects
For discount factors use Exhibit 12B.1 and Exhibit 12B.2.
Spiro Hospital is investigating the possibility of investing in
new dialysis equipment. Two local manufacturers of this equipment
are being considered as sources of the equipment. After-tax cash
inflows for the two competing projects are as follows:
Year
Puro Equipment
Briggs Equipment
1
$320,000
$120,000
2
280,000
120,000
3
240,000
320,000
4
160,000
400,000
5
120,000
440,000
Both projects require an initial investment of $560,000....
Net Present Value and Competing Projects For discount factors use Exhibit 12B.1 and Exhibit 12B.2. Spiro...
Net Present Value and Competing Projects For discount factors
use Exhibit 12B.1 and Exhibit 12B.2. Spiro Hospital is
investigating the possibility of investing in new dialysis
equipment. Two local manufacturers of this equipment are being
considered as sources of the equipment. After-tax cash inflows for
the two competing projects are as follows:
Year
Puro Equipment
Briggs Equipment
1
$320,000
$120,000
2
280,000
120,000
3
240,000
320,000
4
160,000
400,000
5
120,000
440,000
Both projects require an initial investment of $560,000....
Net Present Value and Competing Projects For discount factors use Exhibit 12B.1 and Exhibit 12B.2. Spiro...
Net Present Value and Competing Projects
For discount factors use Exhibit 12B.1 and Exhibit 12B.2.
Spiro Hospital is investigating the possibility of investing in
new dialysis equipment. Two local manufacturers of this equipment
are being considered as sources of the equipment. After-tax cash
inflows for the two competing projects are as follows:
Year
Puro Equipment
Briggs Equipment
1
$320,000
$120,000
2
280,000
120,000
3
240,000
320,000
4
160,000
400,000
5
120,000
440,000
Both projects require an initial investment of $560,000....
Net Present Value and Competing Projects For discount factors use Exhibit 12B.1 and Exhibit 12B.2. Spiro...
Net Present Value and Competing Projects
For discount factors use Exhibit 12B.1 and Exhibit 12B.2.
Spiro Hospital is investigating the possibility of investing in
new dialysis equipment. Two local manufacturers of this equipment
are being considered as sources of the equipment. After-tax cash
inflows for the two competing projects are as follows:
Year
Puro Equipment
Briggs Equipment
1
$320,000
$120,000
2
280,000
120,000
3
240,000
320,000
4
160,000
400,000
5
120,000
440,000
Both projects require an initial investment of $560,000....
Net Present Value Use Exhibit 12B.1 and Exhibit 12B.2 to locate the present value of an...
Net Present Value Use Exhibit 12B.1 and Exhibit 12B.2 to locate
the present value of an annuity of $1, which is the amount to be
multiplied times the future annual cash flow amount.
Each of the following scenarios is independent. Assume that all
cash flows are after-tax cash flows.
Campbell Manufacturing is considering the purchase of a new
welding system. The cash benefits will be $480,000 per year. The
system costs $1,450,000 and will last 10 years.
Evee Cardenas is...
Net Present Value Use Exhibit 12B.1 and Exhibit 12B.2 to locate the present value of an...
Net Present Value Use Exhibit 12B.1 and Exhibit 12B.2 to locate
the present value of an annuity of $1, which is the amount to be
multiplied times the future annual cash flow amount.
Each of the following scenarios is independent. Assume that all
cash flows are after-tax cash flows.
Campbell Manufacturing is considering the purchase of a new
welding system. The cash benefits will be $480,000 per year. The
system costs $2,750,000 and will last 10 years.
Evee Cardenas is...
Net Present Value Use Exhibit 12B.1 and Exhibit 12B.2 to locate the present value of an...
Net Present Value
Use Exhibit 12B.1 and Exhibit 12B.2 to locate the present value
of an annuity of $1, which is the amount to be multiplied times the
future annual cash flow amount.
Each of the following scenarios is independent. Assume that all
cash flows are after-tax cash flows.
Campbell Manufacturing is considering the purchase of a new
welding system. The cash benefits will be $480,000 per year. The
system costs $2,150,000 and will last 10 years.
Evee Cardenas is...
Net Present Value Use Exhibit 12B.1 and Exhibit 12B.2 to locate the present value of an...
Net Present Value
Use Exhibit 12B.1 and Exhibit 12B.2 to locate the present value
of an annuity of $1, which is the amount to be multiplied times the
future annual cash flow amount.
Each of the following scenarios is independent. Assume that all
cash flows are after-tax cash flows.
Campbell Manufacturing is considering the purchase of a new
welding system. The cash benefits will be $480,000 per year. The
system costs $2,950,000 and will last 10 years.
Evee Cardenas is...
Net Present Value Use Exhibit 12B.1 and Exhibit 12B.2 to locate the present value of an...
Net Present Value
Use Exhibit 12B.1 and Exhibit 12B.2 to locate the present value
of an annuity of $1, which is the amount to be multiplied times the
future annual cash flow amount.
Each of the following scenarios is independent. Assume that all
cash flows are after-tax cash flows.
Campbell Manufacturing is considering the purchase of a new
welding system. The cash benefits will be $480,000 per year. The
system costs $2,850,000 and will last 10 years.
Evee Cardenas is...
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