Question

1.What is the present value of $15 if I receive it in 4 years and the discount rate is 3%? Round your answer to two decimal places.

2. How much cash flow will an investment of $1264 need to generate annually to pay for itself in 6 years? Round your answer to the whole dollar.

3.What is the net present value of $50 each year for the next 7 years if the discount rate is 1%? Round your answer to two decimal places.

4.You invest $100 today expecting to make a return of 8% over 5 years. After the 5 years in up, you get a cash payout of $140. Did the investment perform to you expectations?

Yes

No

5. You invest $100 today expecting to make a return of 8% over 5 years. After the 5 years in up, you get a cash payout of $140. What is the difference between what you invested, and the net present value of your nominal dollar return adjusted to its net present value? Round your answer to two decimal places. Your answer should be either positive or negative based on NPV-100.

6. the Brats'n'Jerky meat packing company is considering purchasing a new piece of equipment that will cut back on waste as well as save time. Savings from reduced waste are expected to be $2712. It's expected that the new equipment will cut the number of hours required at the plant by 1531 hours annually. The cost of one hour of labor $16. The cost of the piece of equipment being considered is $80436. What is the expected payback on the piece of equipment being considered? Round your answer to one decimal place.

7. The Johnny Pickles Brewing Company has been successful as a small craft microbrewery with a focus on distributing its products to bars and restaurants. They are considering a bottling line that will allow them to start distributing to grocery and party stores. The equipment will cost $79505 to purchase. It's expected that additional sales will be $25680 per year while variable expenses are expected to increase $4930 annually. The equipment is expected to last 5 years and will need a one time overhaul in year 3 that will cost $3315. The Johnny Pickles Brewing Company uses a discount rate of 10% when deciding to accept a project. What is the projected undiscounted cash flow for the bottling line in year 3? Round your answer to the whole dollar.

Answer 1

1. Present value of $1 after 4 years PVIF(3%,4) = 0.888487

present value of $15 after 4 years = 0.888487*15

= 13.33

2. if there is no discount rate given in question then cash flow generate annually = 1264/6

= 210.66 or 211 annually

and if discount rate of 3% has taken then PVIFA(3%,6) = 5.417

Cash flow need to generate annually = 1264/5.417

= 233.33 or 233

3. PVIFA ( 1%,7) = 6.728

present value of $ 50 each year for the next 7 year = 6.728*50

= 336.41

4. as per compound interest formula C.I. = principal*(1+i)^n

where i = interest rate per annum (8%)

n - no. of years compounded (5 years)

C.I = 140

principal amt. = $ 100

put the values in formula and solve for i

140 = 100*(1+i)^(5)

1.40 = (1+i)^5

take (1/5) of both sides

1.06961 = (1+i)

i = 1.06961 -1

= 0.06961

or 6.96%

6.96% is less than expected return so investment did not perform to you expectation.

so answer would be No.

Please comment in case of further clarification required.