 # Assignment 4- Group 14.docx - 1a) NPV = Present value of...

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1a)NPV = Present value of cash inflows - Initial investment= \$28,000 * Cumulative PV Factor at 14% for 10 years - \$110,000= \$28,000 * 5.216116 - \$110,000 = \$36,0511b)Payback period = Initial investment / Annual cash inflows = \$110,000 / \$28000 = 3.93years1c)At IRR Present value of cash inflows is equal to initial investment.\$28,000 * Cumulative PV Factor at IRR for 10 years = \$110,000Cumulative PV Factor at IRR for 10 years = \$110,000 / \$28,000 = 3.92857The PV factor falls between 21% to 22%, on intrapolation = 21.96%1d)Annual net income = Saving in cash operating cost - depreciation = \$28,000 -(\$110,000/10)= \$17,000Accounting rate of return = Average annual income / Initital investment = \$17,000 /\$110,000 = 15.45%1e)Accounting rate of return based on average investment = Average annual income /Average investmentAverage investment = (Initial investment + Salvage value) / 2 = \$110,000/2 = \$55,000Accounting rate of return = \$17,000 / \$55,000 = 30.91%
2) Factors City Hospital should considerQuantitative financial aspect to analyze financial marketsand securities.Qualitative factors such as improving employee morale, product quality etc.Financial factors such as expenses, incomes etc.= 15.45%2. Factors Homecare should consider include:a. Quantitative financial aspects.

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Term
Fall
Professor
NormanLeclair
Tags
Household income in the United States, cumulative PV factor, Factors Homecare
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