Q6) IBM networks want to modernize their networking system. Proposals have been received from two major software companies.  The first proposal cost $6million but will raise the firm’s annual cash flows by $3million. The second proposal cost $7million and provides cash flow of $3.5million a year. Both projects have a life span of 3 years. Assuming that the cost of capital is 8%, which proposal may be recommended on the basis of Net Present Value criteria.

Q: OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship would cost $500 million but…

A: IRR It is the capital budgeting technique of the discounted cash flow that gives the rate of return…

Q: Faleye Consulting is deciding which of two computer systems to purchase. It can purchase…

A: Please find the answer to the above question below:

Q: Jefferson Products Inc. is considering purchasing a new automatic press brake, which costs $300,000…

A: Cost of press brake is $300,000 Net cash flows per year is $80,000 Selling price after 10 years is…

Q: John’s Gyms is choosing between two new offerings, a Playhouse and a Fort - The Playhouse line will…

A: Cross over rate is the rate at which NPV of both project is nil. It is same as IRR but the only…

Q: Cullumber, Inc., a resort management company, is refurbishing one of its hotels at a cost of…

A: IRR can be calculated by following function in excel =IRR(values,[guess]) Values = Cash flows Guess…

Q: 10 million for a feasibility study. If the company goes ahead with the project, it must immediately…

A: NPV is the net present value that is the difference between the present value of cash flow and…

Q: 6. Anderson Motors Inc. is contemplating building a new plant. The company anticipates that the…

A: The net present value can be calculated with the help of below expression:

Q: purchase of a new copy machine with an initial investment cost of $150,000 and the center expects an…

A: The payback period is the amount of time it takes to recoup the cost of your investment. In layman's…

Q: The ABC Resort is redoing its golf course at a cost of $722,000. It expects to generate cash flows…

A: Rd=17.1% YEAR CASHFLOW 0 -722000 1 535000 2 754000 3 137000

Q: Faleye consulting is deciding which of to computer systems yo purchase. It can purchase…

A: The concept of equivalent annual annuity is used in capital budgeting. This approach is used for…

Q: Zencorp is considering buying a $220,000 production machine. It would be depreciated (simplified…

A: Given that;Cost of the machine is $220,000Depreciation period is 10 yearsSo, the salvage value after…

Q: Chrustuba Inc. is evaluating a new project with an after-tax cost of s8.0 million at t = 0. There is…

A: Data given: NPV if successful (50% chance) Year Cash Outflow ($) Cash Inflow ($) 0 -8000000…

Q: Giant Machinery Ltd is considering investing in one of the two following Projects to buy new…

A: a. Based on the Net present value, Project 1 should be selected, because it has a greater NPV of…

Q: You are evaluating a project that will cost $500,000, but is expected to produce cash flows of…

A: Cost of the project is $500,000 Annual cash flows are $125,000 Time period is 10 years Cost of…

Q: A company is considering an investment in equipment that can produce more efficiently than the…

A: Payback period is the number of years under which original investment amount can be recovered.

Q: Iridium Corp. has spent $3.5 billion over the past decade developing satellitebased a…

A: Sunk cost is the cost that has been incurred in the past, but doesn't have any impact on future…

Q: 1. how long will it take for bnn corporation to recover its initial investment? 2. what is the NPV…

A: Formula: Payback Period=  Completed Years+ Remaining AmountAvailable Amount Given: Initial…

Q: The firm is considering a project with a net cost of investment of ₱4,000,000 can bring in the…

A: Year Cash flow 0 -4000000 1 700000 2 900000 3 850000 4 1600000 5 750000

Q: A new computer system will require an initial outlay of $20,500, but it will increase the firm’s…

A: Capital budgeting refers to the evaluation of the profitability of potential investment and projects…

Q: 9. Chrustuba Inc. is evaluating a new project that would cost $8.0 million at t= 0. There is a 50%…

A: Net present value (NPV) is the present value of cash flows. It is the difference between the value…

Q: A firm considering the installation of an automatic data processing unit to handle some of its…

A: given, purchase price = P20,000 lease: year 1 = P8000 decrease every year = P1000 n= 4 r=15%

Q: 32) CGI Inc. is developing a new software platform, which requires an immediate investment of $780…

A: Net Present Value is a difference between the present values of cash outflow and inflow over the…

Q: 8. Maxmillan Corp is planning to buy a new computer system for $800,000 with a useful life of six…

A: Note: There are multiple sub-parts to the question. As per our policy I will answer first three…

Q: A firm is considering the installation of an automatic data processing unit to handle some of its…

A: Purchase now = 20,000 First lease payment = 8,000 Annual increase in lease payment = 1000 N = 4…

Q: Medela's Entertainment Systems is setting up to manufacture a new line of video game consoles. The…

A: Given information: Cost of the equipment is $1,750,000 Expected cash flows over 4 years is…

Q: Check my eEgg is considering the purchase of a new distributed network computer system to help…

A: Net Present Value=(Present Value of Cash Inflows-Present Value of Cash Outflows) IRR is a rate at…

Q: Hathaway, Inc., a resort company, is refurbishing one of its hotels at a cost of $6,820,850.…

A: IRR is the internal rate of return.

Q: Big Steve's, makers of swizzle sticks, is considering the purchase of a new plastic stamping…

A: NPV is the difference between present value(PV) of all cash inflows and initial investment. NPV =PV…

Q: Hathaway, Inc., a resort company, is refurbishing one of its hotels at a cost of $7,188,472.…

A: Internal rate of return is defined as the metric, which is generally used in the financial analysis…

Q: Jack Sprat Inc. wants to know if they invest 11,548 in new exercise equipment, plus $2,000 for…

A: Initial investment = 11,548 + 2,000 = 13,548 To calculate the payback period, we need to find the…

Q: Calculate the NPV and decide if the system is worth installing if the required rate of return is…

A: Information Provided: Initial Outlay = $23,500 Cash flows = $5000 Term = 7 years

Q: what is the present value of the cash flow stream

A: An Annuity is a series of payments of fixed amounts and at fixed intervals. These can be of two…

Q: Suppose Kyler Valley is deciding whether to purchase new accounting software. The payback for the…

A: Cash inflow is the flow of cash inwards towards the business. Given in the question: Software cost =…

Q: Anta networks want to modernize their networking system. Proposals have been received from two major…

A: Formulas:

Q: 9. Chrustuba Inc. is evaluating a new project that would cost $8.0 million at t= 0. There is a 50%…

A: A method of capital budgeting that helps to evaluate the present worth of cash flow and a series of…

Q: Cains, Inc., a resort management company, is refurbishing one of its hotels at a cost of $8,498,918.…

A: The acronym IRR stands for internal rate of return. It shows the actual return wherein the present…

Q: Folsom Advertising, Inc. is considering an investment in a new information system. The newsystem…

A: The Payback Period indicates how long it would take a company to repay investment. This form of…

Q: Tannen Industries is considering an expansion. The necessary equipment would be purchased for $18…

A: Relevant cost analysis: In project costing and decision making, relevant costs play an important…

Q: what is the present value of the cash flow stream that the company is offering you?

A: Present value of annuity is the current value of the future sum of cash flows. The present value…

Q: A company just paid $10 million for a feasibility study. If the company goes ahead with the project,…

A: The question is related to capital Budgeting. The Net Present Value is the excess of Present value…

Q: You wrote a piece of software that does a better job of allowing computers to network than any other…

A: The current value of the cash flow or stream of cash flow after discounting is termed as the present…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.