Question

Payback, NPV, and IRR Rieger International is evaluating the feasibility of investing $95 comma 00095,000 in...

Payback, NPV, and IRR Rieger International is evaluating the feasibility of investing

$95 comma 00095,000

in a piece of equipment that has a

55 -year

life. The firm has estimated the cash inflows associated with the proposal as shown in the following table:

LOADING...

. The firm has a

99 %

cost of capital.

a. Calculate the payback period for the proposed investment.

b. Calculate the net present value (NPV) for the proposed investment.

c. Calculate the internal rate of return

(IRR) ,

rounded to the nearest whole percent, for the proposed investment.

d. Evaluate the acceptability of the proposed investment using NPV and IRR. What recommendation would you make relative to implementation of the project?

Year

​(t​)

Cash inflows​ (CF)

1

​$35 comma 00035,000

2

​$30 comma 00030,000

3

​$30 comma 00030,000

4

​$25 comma 00025,000

5

​$30 comma 000

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
​Payback, NPV, and IRR: Rieger International is evaluating the feasibility of investing ​$96,000 in a piece...
​Payback, NPV, and IRR: Rieger International is evaluating the feasibility of investing ​$96,000 in a piece of equipment that has a 5​-year life. The firm has estimated the cash inflows associated with the proposal as shown in the following​ table: The firm has a 8% cost of capital. a.  Calculate the payback period for the proposed investment. b.  Calculate the net present value​ (NPV) for the proposed investment. c.  Calculate the internal rate of return ​(IRR)​, rounded to the nearest...
Rieger International is evaluating the feasibility of investing ​$104 comma 000104,000 in a piece of equipment...
Rieger International is evaluating the feasibility of investing ​$104 comma 000104,000 in a piece of equipment that has a 55​-year life. The firm has estimated the cash inflows associated with the proposal as shown in the following​ table: LOADING... . The firm has a 1111​% cost of capital. a.  Calculate the payback period for the proposed investment. b.  Calculate the net present value​ (NPV) for the proposed investment. c.  Calculate the internal rate of return ​(IRR)​, rounded to the nearest...
Rieger International is evaluating the feasibility of investing ​$94000 in a piece of equipment that has...
Rieger International is evaluating the feasibility of investing ​$94000 in a piece of equipment that has a 5​-year life. The firm has estimated the cash inflows associated with the proposal as shown in the following​ table: The firm has a 11​% cost of capital. Year ​(t​) Cash inflows​ (CF) 1 ​$40,000 2 ​$40,000 3 ​$25,000 4 ​$25,000 5 ​$20000 a.  Calculate the payback period for the proposed investment. b.  Calculate the net present value​ (NPV) for the proposed investment. c.  ...
Blackmores company is evaluating the feasibility of investing $80000 in a project with a 5 years...
Blackmores company is evaluating the feasibility of investing $80000 in a project with a 5 years life. The firm has estimated the cash inflows associated with the proposal as shown in the following table. The firm’s cost of capital is 8%. Company’s policy to recoup investment is four years or less. Average book value is $13550 Year cash inflows Net income 1 $25000 $3000 2 $25000 $2500 3 $25000 $2250 4 $25000 $2600 5 $25000 $3200 Require: a. Calculate the...
NPV and IRR: Equal Annual Net Cash Inflows Winter Fun Company is evaluating a capital expenditure...
NPV and IRR: Equal Annual Net Cash Inflows Winter Fun Company is evaluating a capital expenditure proposal that requires an initial investment of $68,168, has predicted cash inflows of $14,000 per year for seven years, and has no salvage value. a. Using a discounted rate of 14 percent, determine the net present value of the investment proposal. Use a negative sign with your answer, if appropriate. $Answer b. Determine the proposal's internal rate of return. (Refer to Appendix 12B if...
NPV and IRR: Equal Annual Net Cash Inflows Winter Fun Company is evaluating a capital expenditure...
NPV and IRR: Equal Annual Net Cash Inflows Winter Fun Company is evaluating a capital expenditure proposal that requires an initial investment of $61,256, has predicted cash inflows of $13,000 per year for seven years, and has no salvage value. a. Using a discounted rate of 14 percent, determine the net present value of the investment proposal. Use a negative sign with your answer, if appropriate. $Answer b. Determine the proposal's internal rate of return. (Refer to Appendix 12B if...
NPV and IRR: Unequal Annual Net Cash Inflows Assume that Goodrich Petroleum Corporation is evaluating a...
NPV and IRR: Unequal Annual Net Cash Inflows Assume that Goodrich Petroleum Corporation is evaluating a capital expenditure proposal that has the following predicted cash flows: Initial Investment $(58,220) Operation Year 1 23,000 Year 2 31,000 Year 3 22,000 Salvage 0 a. Using a discount rate of 10 percent, determine the net present value of the investment proposal. $ Answer (Round answer to the nearest whole number.) b. Determine the proposal's internal rate of return. (Refer to Appendix 12B if...
NPV and IRR: Unequal Annual Net Cash Inflows Assume that Goodrich Petroleum Corporation is evaluating a...
NPV and IRR: Unequal Annual Net Cash Inflows Assume that Goodrich Petroleum Corporation is evaluating a capital expenditure proposal that has the following predicted cash flows: Initial Investment $(58,220) Operation Year 1 23,000 Year 2 31,000 Year 3 22,000 Salvage 0 a. Using a discount rate of 10 percent, determine the net present value of the investment proposal. $Answer (Round answer to the nearest whole number.) b. Determine the proposal's internal rate of return. (Refer to Appendix 12B if you...
IRR: Mutually exclusive projects Ocean Pacific Restaurant is evaluating two mutually exclusive projects for expanding the...
IRR: Mutually exclusive projects Ocean Pacific Restaurant is evaluating two mutually exclusive projects for expanding the restaurant's seating capacity. The relevant cash flows for the projects are shown in the following table. The firm's cost of capital is 4%. Project X Project Y Initial Investment (CF) 980,000 363,000 Year               Cash inflows (CF) 1 150,000 110,000 2 170,000 98,000 3 220,000 93,000 4 270,000 82,000 5 340,000 67,000 a. calculate the IRR to the nearest whole percent for each of...
NPV and IRR   Benson Designs has prepared the following estimates for a​ long-term project it is...
NPV and IRR   Benson Designs has prepared the following estimates for a​ long-term project it is considering. The initial investment is ​$84 comma 600​, and the project is expected to yield​ after-tax cash inflows of ​$9 comma 000per year for 15years. The firm has a cost of capital of 13​%. a.  Determine the net present value​ (NPV) for the project. b.  Determine the internal rate of return​ (IRR) for the project. c.  Would you recommend that the firm accept or...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT