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Do Homework - Cristian Clementi - Google Chrome Secure | https://www.mathxl.com yerHomework.aspx?homeworkId=448 577575 &questionld; = 1 &flushed; = false&cld-4704237;&centerwin; =yes FIN-350-MWF1230A-Fundamentals of Business Financs Cristian Clementi 12/10/17 3:10 AM Homework: Module 8: Chapter 10 Score: 0 of 5 pts P10-10 (similar to) Save 2 of 8 (0 complete HW Score: 0%, 0 of 40 pts Question Help NPV Mutually exclusive projects Hook Industries is considering the replacement of one of its old drill presses. Three alternative replacement presses are under consideration. The relevant cash fiows assodiated wrh each are shown in the tollowing table.. The firm's cost of capital is 996. a. Calculate the net present value (NPV) of each press b. Using NPV, evaluate the acceptability of each press c. Rank the presses from best to worst using d. Calculate the prontabity iidex (PI) for each press. e. Rank the presses from best to worst using Pl. EXi NPV Data Table a. The NFV of press A is (Round to the nearest cent.) (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) ess Initial investment (GFo $85,500 $60,300 h inflows (CF Year () $18,400 S18,400 $18,400 S18,400 $18,400 S18,400 $18,400 14,300 $16,100 18,200 $20,400 24,700 530.100 520.400 520,300 520.400 530.100 539,500 $50,000 Print Done Enter your answer in the answer box and then click Check Answer 14 pertaining Clear All Check Answer 3:10 AM O Type here to search dx ^ 12/10/20179

Explanation / Answer

NPV
A=-85500+18400/0.09*(1-1/1.09^8)=16430.67
B=-60300+12400/1.09+14300/1.09^2+16100/1.09^3+18200/1.09^4+20400/1.09^5+24700/1.09^6=16424.07
C=-129900+50200/1.09+30100/1.09^2+20400/1.09^3+20300/1.09^4+20400/1.09^5+30100/1.09^6+39500/1.09^7+50000/1.09^8=49530.6

All projects are having positive NPVs so accept all projects
Ranking: C-1,A-2,B-3

PI

PI=1+NPV/Initial Investment
A=1+16430.67/85500=1.192172
B=1+16424.07/60300=1.272373
C=1+49530.6/129900=1.381298

Ranking-C-1,B-2,A-3

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