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In: Accounting
Net Present Value Method and Internal Rate of Return Method for a Service Company Buckeye Healthcare...
Net Present Value Method and Internal Rate of Return Method for a Service Company Buckeye Healthcare Corp. is proposing to spend $186,725 on an eight-year project that has estimated net cash flows of $35,000 for each of the eight years. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a. Compute the net present value, using a rate of return of 12%. Use the table of present value of an annuity of $1 presented above. If required, round your answers to the nearest dollar. If required, use the minus sign to indicate a negative net present value. Present value of annual net cash flows $ Less amount to be invested Net present value $ b. Based on the analysis prepared in part (a), is the internal rate of return (1) more than 12%, (2) 12%, or (3) less than 12%? Less than 12% c. Determine the internal rate of return by computing a present value factor for an annuity of $1 and using the table of the present value of an annuity of $1 presented above. %
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Net Present Value Method and Internal Rate of Return Method for a Service Company Buckeye Healthcare...
Net Present Value Method and Internal Rate of Return Method for
a Service Company Buckeye Healthcare Corp. is proposing to spend
$186,725 on an eight-year project that has estimated net cash flows
of $35,000 for each of the eight years:
Present Value of an Annuity of $1 at
Compound Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893
0.870
0.833
2
1.833
1.736
1.690
1.626
1.528
3
2.673
2.487
2.402
2.283
2.106
4
3.465
3.170
3.037
2.855
2.589...
Net Present Value Method and Internal Rate of Return Method for a service company Keystone Healthcare...
Net Present Value
Method and Internal Rate of Return Method for a service company
Keystone Healthcare
Corp. is proposing to spend $128,960 on a seven-year project that
has estimated net cash flows of $31,000 for each of the seven
years.
Present Value of an Annuity of $1 at
Compound Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893
0.870
0.833
2
1.833
1.736
1.690
1.626
1.528
3
2.673
2.487
2.402
2.283
2.106
4
3.465
3.170
3.037
2.855
2.589...
Net Present Value Method and Internal Rate of Return Method for a service company Keystone Healthcare...
Net Present Value Method and Internal Rate of Return Method for
a service company
Keystone Healthcare Corp. is proposing to spend $138,216 on a
nine-year project that has estimated net cash flows of $24,000 for
each of the nine years.
Present Value of an Annuity of $1 at
Compound Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893
0.870
0.833
2
1.833
1.736
1.690
1.626
1.528
3
2.673
2.487
2.402
2.283
2.106
4
3.465
3.170
3.037
2.855
2.589...
Net Present Value Method, Internal Rate of Return Method, and Analysis for a Service Company The...
Net Present Value Method, Internal Rate of Return Method, and
Analysis for a Service Company
The management of Advanced Alternative Power Inc. is considering
two capital investment projects. The estimated net cash flows from
each project are as follows:
Year
Wind
Turbines
Biofuel Equipment
1
$180,000
$360,000
2
180,000
360,000
3
180,000
360,000
4
180,000
360,000
The wind turbines require an investment of $466,020, while the
biofuel equipment requires an investment of $1,027,800. No residual
value is expected from either...
Net Present Value Method, Internal Rate of Return Method, and Analysis for a Service Company The...
Net Present Value Method, Internal Rate of Return Method, and
Analysis for a Service Company
The management of Advanced Alternative Power Inc. is considering
two capital investment projects. The estimated net cash flows from
each project are as follows:
Year
Wind
Turbines
Biofuel Equipment
1
$390,000
$740,000
2
390,000
740,000
3
390,000
740,000
4
390,000
740,000
The wind turbines require an investment of $1,184,430, while the
biofuel equipment requires an investment of $2,112,700. No residual
value is expected from either...
Net Present Value Method, Internal Rate of Return Method, and Analysis for a Service Company The...
Net Present Value Method, Internal Rate of Return Method, and
Analysis for a Service Company
The management of Advanced Alternative Power Inc. is considering
two capital investment projects. The estimated net cash flows from
each project are as follows:
Year
Wind
Turbines
Biofuel Equipment
1
$390,000
$740,000
2
390,000
740,000
3
390,000
740,000
4
390,000
740,000
The wind turbines require an investment of $1,184,430, while the
biofuel equipment requires an investment of $2,112,700. No residual
value is expected from either...
Net Present Value Method, Internal Rate of Return Method, and Analysis for a Service Company The...
Net Present Value Method, Internal Rate of Return Method, and
Analysis for a Service Company
The management of Style Networks Inc. is considering two TV show
projects. The estimated net cash flows from each project are as
follows:
Year
After Hours
Sun Fun
1
$320,000
$290,000
2
320,000
290,000
3
320,000
290,000
4
320,000
290,000
After Hours requires an investment of $913,600, while
Sun Fun requires an investment of $880,730. No residual
value is expected from either project.
Present Value...
Net Present Value Method, Internal Rate of Return Method, and Analysis for a Service Company The...
Net Present Value Method, Internal Rate of Return Method, and
Analysis for a Service Company
The management of Advanced Alternative Power Inc. is considering
two capital investment projects. The estimated net cash flows from
each project are as follows:
Year Wind Turbines Biofuel Equipment
1 $420,000 $800,000
2 420,000 800,000
3 420,000 800,000
4 420,000 800,000
The wind turbines require an investment of $1,275,540, while the
biofuel equipment requires an investment of $2,284,000. No residual
value is expected from either...
Average Rate of Return Method, Net Present Value Method, and Analysis for a service company The...
Average Rate of Return Method, Net Present Value Method, and
Analysis for a service company
The capital investment committee of Arches Landscaping Company
is considering two capital investments. The estimated income from
operations and net cash flows from each investment are as
follows:
Front-End Loader
Greenhouse
Year
Income from
Operations
Net Cash
Flow
Income from
Operations
Net Cash
Flow
1
$65,100
$209,000
$137,000
$334,000
2
65,100
209,000
104,000
282,000
3
65,100
209,000
52,000
199,000
4
65,100
209,000
23,000
136,000
5...
Average Rate of Return Method, Net Present Value Method, and Analysis for a service company The...
Average Rate of Return Method, Net Present Value Method, and
Analysis for a service company
The capital investment committee of Arches Landscaping Company
is considering two capital investments. The estimated operating
income and net cash flows from each investment are as follows:
Front-End Loader
Greenhouse
Year
Operating
Income
Net Cash
Flow
Operating
Income
Net Cash
Flow
1
$54,600
$164,000
$115,000
$262,000
2
54,600
164,000
87,000
221,000
3
54,600
164,000
44,000
156,000
4
54,600
164,000
19,000
107,000
5
54,600
164,000
8,000...
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