Calculate net present values

Assignment Help Finance Basics
Reference no: EM1359514

1. A firm's information systems department receives many requests for proposed projects to improve the system. Each project proposal is processed, using the proposing department's estimate of benefits and the information systems departments' estimate of project costs. The costs are incurred within three months of project adoption (and are treated as occurring at the present). Estimated benefits are calculated as of the end of 12 months, 24 months, and 36 months after project completions. Company policy is to disregard and benefits beyond 36 months as technology will probably outdate systems by that time. The company uses a discount rate of 12% per year. Calculate net present values of the following eight proposed projects and explain how this information would most likely be used.

Department Cost Benefits@12 MO. Benefits@24 MO. Benefits@36 MO.
Production $300,000 $100,000 $120,000 $150,000
Production $260,000 $150,000 $200,000 $0
Marketing $220,000 $150,000 $200,000 $300,000
Marketing $520,000 $250,000 $240,000 $220,000
Marketing $360,000 $200,000 $180,000 $150,000
Transport $360,000 $200,000 $200,000 $200,000
Admin. $580,000 $0 $500,000 $400,000

 

Reference no: EM1359514

Questions Cloud

Social psychologist contacted by a defense attorney : You are a social psychologist contacted by a defense attorney who is convinced that her client is innocent of assault.
Pofessional code of conduct aicpa : What are the 6 principles in the AICPA's CPC and the purpose of each principle?
Kind of network crimes may use p to p networks : What kind of network crimes may use P2P networks? Find the most challenging crimes that could be based on P2P networks and write a report on how to do forensic investigations on these crimes.
Work ethic cases : Your supplier in Latin America sends you two airline tickets as a token of appreciation for doing business with them. Your company does not allow employees to accept gifts over $50. It is customary in Latin America to give a gift for doing busines..
Calculate net present values : A company's information systems department receives many requests for proposed projects to improve the system. Each project proposal is processed, using the proposing department's estimate of profits and data systems departments' estimate of project ..
Crisis intervention or crisis response : Use the ACA Code of Ethics for any information on crisis intervention or crisis response.
Determining fringe benefits : Why are fringe benefits provided by employers to employees more valuable to those employees than if the employer simply gave the employees the money necessary to purchase those fringe benefits?
Explain differentiate descriptive and historical : Explain Differentiate descriptive and historical and correlational and experimental research methods
Find the maximum altitude reached by the rocket : Find out the maximum altitude reached by the rocket.

Reviews

Write a Review

Finance Basics Questions & Answers

  Effective and nominal interest rates

You're offered two loan options which you should choose between. Federal Bank offers to charge you 6% compounded annually. State Bank offers to charge you 5.8% compounded monthly. Which of following is true?

  Compute cost of retained earnings and common equity and wacc

Compute cost of retained earnings and common equity and WACC and What is the minimum cash flow per year this project should generate over the next four years to be accepted by the company

  Provide a short justification

The current value of Digital stock is $44 per share. You are offered a forward value for Digital stock to be delivered in one year of $42. The forward value is lower than the spot price because the market anticipates a sharp decline in the price of D..

  Preparing amortization schedule using effective rate

National Orthopedics Co. issued 9% bonds, dated January 1, with the face amount of $500,000 on January 1, 2011.  Develop an amortization schedule that determines interest at the effective rate each period.

  Determine the effective quarterly rate

Determine the effective quarterly rate and the nominal annual rate, What is the spreadsheet function to find the nominal annual rate above

  The macrs depreciation system

Given below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes.

  Calculate the contribution margin for each copy

Fixed expenses for each new edition of the book, Calculate the contribution margin for each copy of the book?

  Describe in general terms how each option

Describe in general terms how each option could change a project's NPV and show the corresponding risk of each option, relative to what would have been estimated if the option had not been considered.

  Computing present value and future value

Find out the future value one year from now of $7,000 investment at a 3 percent annual compound interest rate. Also calculate the future value if the investment is made for two years.

  Determining the cost of interest payment

ABC Inc. has CAD20,000,000 interest payment due on September 19th and is concerned about the possible CAD appreciation. Find out the USD cost of interest payment for ABC Inc?

  Objective type questions cost of capital based on capm

Objective type questions Cost of Capital based on CAPM and Companies can issue different classes of common stock

  Determine total factory overhead costs

At a volume of 20,000 direct labor hours, Tirso Company incurs 50,000 in factory overhead costs, including 10,000 in fixed costs. suppose that this activity is within the relevant range,

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd