Demonstrate your understanding of financial concepts by completing the following problems. Where appropriate, show or explain your work. You may use Excel to work on the problems.
Problem 1. Calculating net present value (NPV): Porter Incorporated has two exclusive projects, listed in the table below. Use the NPV rule to rank these two projects. If the appropriate discount rate is 13 percent, which project should be chosen?
|Year||Project A||Project B|
Problem 2. Calculating payback period: An investment project provides cash inflows of $920 per year for eight years. Calculate the project’s payback period if the initial cost is each of the following:
Problem 3. Calculating internal rate of return (IRR) for cash flows: Calculate the internal rate of return for the cash flows of the two projects in the table below.
|Year||Project A||Project B|
Problem 4. Calculating profitability index of a project: Jeff plans to open a small health club. The equipment will cost $225,000. Jeff expects that there will be after-tax cash inflows of $62,000 annually for seven years. The equipment will then be scrapped and the health club will close. At year-end of the first year, the first cash inflow occurs. The required return is 13 percent. What is the project’s profitability index? Should it be accepted?
Problem 5. Calculating project NPV: Jenny’s Creamery is considering the purchase of a $27,000 ice cream maker. The ice cream maker has an economic life of eight years. Using the straight-line method, it will be fully depreciated. The machine will produce 250,000 servings per year, with each costing $1.25 to make, and priced at $1.99. The discount rate is 12 percent. The tax rate is 35 percent. Should the company make the purchase? Provide a rationale using the calculations.
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
EssayBrill has stood as the world’s leading custom essay writing services providers. Once you enter all the details in the order form under the place order button, the rest is up to us.
At EssayBrill, we prioritize on all aspects that bring about a good grade such as impeccable grammar, proper structure, zero-plagiarism and conformance to guidelines. Our experienced team of writers will help you completed your essays and other assignments.
Admission and Business Papers
Be assured that you’ll definitely get accepted to the Master’s level program at any university once you enter all the details in the order form. We won’t leave you here; we will also help you secure a good position in your aspired workplace by creating an outstanding resume or portfolio once you place an order.
Editing and Proofreading
Our skilled editing and writing team will help you restructure you paper, paraphrase, correct grammar and replace plagiarized sections on your paper just on time. The service is geared toward eliminating any mistakes and rather enhancing better quality.
We have writers in almost all fields including the most technical fields. You don’t have to worry about the complexity of your paper. Simply enter as much details as possible in the place order section.