Question

Park Co. is considering an investment that requires immediate payment of $26,945 and provides expected cash...

Park Co. is considering an investment that requires immediate payment of $26,945 and provides expected cash inflows of $8,500 annually for four years. Park Co. requires a 7% return on its investments.

1-a. What is the net present value of this investment? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your present value factor to 4 decimals.)

Cash Flow Select Chart Amount x PV Factor = Present Value
Annual cash flow = $0
Net present value

1-a. What is the internal rate of return? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your present value factor to 4 decimals.)
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer 1-a:

Net present value = $1,846

Workings are as below:

Answer 1-a:

Internal rate of return = 10.00%

Workings:

Initial investment = $26,945

Annual cash flow = $8,500 for 4 years

To find IRR from given tables, we need to get PV factor where

Initial investment = PV factor * Annual Cash flow

PV factor = $26,945 / $8,500 = 3.1700

From table PVA of $1 in the raw for period 4, we find PV factor of 3.1700 correspond to discount rate of 10%

Hence IRR = 10.00%

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A company is considering investing in a new machine that requires a cash payment of $51,939...
A company is considering investing in a new machine that requires a cash payment of $51,939 today. The machine will generate annual cash flows of $20,885 for the next three years. What is the internal rate of return if the company buys this machine? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Amount Invested -    Annual Net Cash Flow = Present Value Factor Internal Rate of Return...
A company is considering investing in a new machine that requires a cash payment of $61,949...
A company is considering investing in a new machine that requires a cash payment of $61,949 today. The machine will generate annual cash flows of $24,911 for the next three years. QS 11-13 Internal rate of return LO P4 What is the internal rate of return if the company buys this machine? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
A company is investing in a solar panel system to reduce its electricity costs. The system...
A company is investing in a solar panel system to reduce its electricity costs. The system requires a cash payment of $110,174.60 today. The system is expected to generate net cash flows of $10,430 per year for the next 35 years. The investment has zero salvage value. The company requires an 8% return on its investments. 1-a. Compute the net present value of this investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate...
QS B-6 Present value of an annuity LO P3 Beene Distributing is considering a project that...
QS B-6 Present value of an annuity LO P3 Beene Distributing is considering a project that will return $230,000 annually at the end of each year for the next ten years. If Beene demands an annual return of 9% and pays for the project immediately, how much is it willing to pay for the project? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round PVA factor to 4...
Beyer Company is considering the purchase of an asset for $250,000. It is expected to produce...
Beyer Company is considering the purchase of an asset for $250,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 12% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Year 1 Year 2 Year 3 Year 4 Year 5 Total Net cash flows $ 86,000 $ 56,000 $ 86,000 $...
Beyer Company is considering the purchase of an asset for $225,000. It is expected to produce...
Beyer Company is considering the purchase of an asset for $225,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 15% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Year 1 Year 2 Year 3 Year 4 Year 5 Total Net cash flows $ 76,000 $ 55,000 $ 94,000 $...
Velma and Keota (V&K) is considering an investment opportunitiy. The investment requires V&K to spend $10,444.78...
Velma and Keota (V&K) is considering an investment opportunitiy. The investment requires V&K to spend $10,444.78 to acquire a piece of asset. The asset will have an expected useful life of three years and no salvage value. This investment will generate expected cash inflows of $4,200 per year for the next three years. V&K has established a 9 percent minimum rate of return for all investments. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)...
Following is information on two alternative investments being considered by Tiger Co. The company requires a...
Following is information on two alternative investments being considered by Tiger Co. The company requires a 9% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project X1 Project X2 Initial investment $ (80,000 ) $ (123,000 ) Expected net cash flows in: Year 1 28,000 64,500 Year 2 38,500 54,500 Year 3 63,500 44,500 a. Compute each project’s net present value. b. Compute each...
Following is information on two alternative investments being considered by Tiger Co. The company requires a...
Following is information on two alternative investments being considered by Tiger Co. The company requires a 7% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project X1 Project X2 Initial investment $ (106,000 ) $ (172,000 ) Expected net cash flows in: Year 1 38,000 79,500 Year 2 48,500 69,500 Year 3 73,500 59,500 a. Compute each project’s net present value. b. Compute each...
Beyer Company is considering the purchase of an asset for $190,000. It is expected to produce...
Beyer Company is considering the purchase of an asset for $190,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 15% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Year 1 Year 2 Year 3 Year 4 Year 5 Total Net cash flows $ 78,000 $ 46,000 $ 84,000 $...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT