Sam Chapter 11 PF ezto.mheducation.com hm.tpx?-0.2295280890567556 1524009502032

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Sam Chapter 11 PF ezto.mheducation.com hm.tpx?-0.2295280890567556 1524009502032 VHL Central (Spanisl YouTube XFINITY XFINITY stream wstar Online Bankin - Wells Fargo 'I MS AMEX 0.00 points Merrill Corp. has the following information avaiable about a potential capital investment InBal investment net income 5 140000 ?? years Expecied Saivage value Memirs cost of caplal s 150 000 Assume straighi ine deprecation method is used Required: 1. Calculate the project's net present value. (Euture Value of$1. Preaent Value of $1. Euture Valua Annuty of $1. Preeent Value Annuity of S1.MUse appropriate factoris) from the tables provided. Do not round intermediate caloulations. Round the final answer to nearest whole dollar) 2. Without making any callasons, determine whether the internal rate of retum (IRR) is more or less than 10 percent Creator than 10 Percent Less thn to Percent 3. Celculate the net present value using a 13 percent dscount rate.Euture Value of S1. Preeent Valus of $1. Euture Value Annuity of St Present Value Annuity of $1 (Use appropriate factoris) from the tables provided. Do not round intermediate calculations. Round the final answer to nearest whole doller 4 Withoun making any calculatons, deteimine whether the intemal rane of rebrn (RR is more or less than 13 peicent More then 13 percent Less than 13 pRcent Equal to 13 porcont 809 PM 0 Type here to search ^???? 417/2018 2

Explanation / Answer

Req 1: Annual net income 140,000 Add: Depreciation 156250 (1400,000-150000)/8 Annual cash inflows 296250 Annuity factor for 8 yrs at 10% 5.3349 Present value of inflows 1580464 Add: Present value of salvage 69975 ($ 150,000* PVF at yr-4 i.e.0.4665) Total Present value 1,650,439 Less: Initial investmemnt 1,400,000 Net Present value 250,439 Req 2: IRR will be: GREATER than 10% Req 3 Annual net income 140,000 Add: Depreciation 156250 (1400,000-150000)/8 Annual cash inflows 296250 Annuity factor for 8 yrs at 13% 4.7989 Present value of inflows 1421674 Add: Present value of salvage 56430 ($ 150,000* PVF at yr-4 i.e.0.3762) Total Present value 1,478,104 Less: Initial investmemnt 1,400,000 Net Present value 78,104 Req4 IRR will be: MORE than 13%

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