Homework 2 Final.xlsx - 1)A Proj A NPV=$2,688.51 IRR=27.81 Payback=3 years Discounted Payback= 4.14 years Proj B NPV=$5325.53 IRR=23.66 Payback=3.21

Homework 2 Final.xlsx - 1)A Proj A NPV=$2,688.51 IRR=27.81...

  • No School
  • AA 1
  • 9

This preview shows page 1 - 3 out of 9 pages.

1)A. Proj A. NPV=$2,688.51 IRR=27.81% Payback=3 years Discounted Payback= 4.14 years Proj B. NPV=$5325.53 IRR=23.66% Payback=3.21 years Discounted Payback=4.58 years B. 2) A. PV of old lease=$44,955.04 PV of new lease=$44,354.67 B. PMT=$986.65 3) Cash Flow 9500 9500 9500 9500 9500 9500 9500 9500 9500 9500 11000 11000 11000 11000 11000 11000 11000 11000 11000 11000 Initial investmet= $69,133 A. Payback period=7.28 Years B. NPV=$21,654.52 4) Initial investment I would choose Project B as it provides nearly Although it offers a lower IRR, its NPV is muc Yes, he should execpt the new as the its presen
Image of page 1

Subscribe to view the full document.

Installed cost of New Asset After Tax Proceeds From Sale of Old Asset Changes in net working capital Incremental Cash Flows Year 1 rev 2000 (+)exp 3000 (-)Dep 1250 EBIT 3750 (-)Tax Rate 1500 EAT 2250 (+)Dep 1250 CF 3500 Terminal CF Book value of new machine - Book value of Old machine + Increase in net working capital NPV=$4399.44 CF0=8660,CF1=3500….,CF6=3116+3300 5 year life Year 1 5) Pre tax CF 12000 (-)Dep 7200 EBIT 4800 (-)Tax Rate 1920 EAT 2880 (+)Dep 7200 CF 10080 NPV=2,211.13 CF0=-36000,CF1=10800 F1=5, I=10 8 year life Year 1 Pre tax CF 12000 (-)Dep 4500 EBIT 7500 (-)Tax Rate 3000 EAT 4500 (+)Dep 4500 CF 9000 NPV=$12,014.33 CF0=-36000,CF1=9000 F1=8, I=10 Yes the company should replace the machine as doing so will add firm, computed via NPV
Image of page 2
Image of page 3
  • Fall '19

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes