User Account

All Pages

Calculate the investments net present value

Assignment Help Financial Accounting
Reference no: EM131794004

Froogle Enterpises is evaluating an unusual investment project. What makes the project unusual is the stream of cash inflows and outflows shown in the following table.

Year Cash flow
0 $200,000
1 -920,000
2 1,582,000
3 -1,205,000
4 343,200

a. Why is it difficult to calculate the payback period for this project?

b. Calculate the investment's net present value at each of the following discount rates: 0%, 5%, 10%,20%, 25%, 30%, 35%.

c. What does your answer to part b tell you about this project's IRR?

d. Should Froogle invest in this project if it's cost of capital is 5%? What if the cost of capital is 15%?

e. In general, when faced with a project like this one, how should a firm decide whether to invest in the project or reject it?

Reference no: EM131794004

Questions Cloud

Prepare a comparative income statement : Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for 2008 when compared with 2007
Prepare an amortization table for each year of the bond : Using the appropriate factor table determine the amount received by the company on Feb 1, 2014. Prepare an amortization table for each year of the bond.
What is richard net pay for the week : Health Care deducts Social Security, Medicare, and FIT (by percentage method) from his earnings. Assume a rate of 6.2% on $110,100.
Drill press and economic life : State here on Blackboard the minimum EUAC (to the closest dollar) of this drill press and its economic life (in years).
Calculate the investments net present value : Why is it difficult to calculate the payback period for this project - What does your answer to part b tell you about this project's IRR
Draw the red-black trees : Draw the red-black trees for the 2-3-4 trees in Exercises 1-6.Draw the 2-3-4 tree that results when the values are inserted in the order.
What additional investment in accounts receivable is needed : Henderson Office Supply is considering a more liberal credit policy to increase sales, but expects that 5 percent of the new accounts will be uncollectible.
Prepare a comparative balance sheet : Prepare a comparative balance sheet for 2008 and 2007, stating each asset as a percent of total assets and each liability and stockholders equity item
Radio frequency identification and wireless sensor networks : Why are radio frequency identification (RFID) and wireless sensor networks valuable for business?

Reviews

Write a Review

Financial Accounting Questions & Answers

  Total payroll of walnut co was 184000 of which 320000

total payroll of walnut co. was 184000 of which 320000 represented amounts paid in excess of 106800 to certain

  Transactions pertaining to investments in common stock

Nosker Inc. had the following transactions pertaining to investments in common stock. Jan. 1 Purchased 4,400 shares of Escalante Corporation common stock (5%) for $246,400 cash. July 1 Received a cash dividend of $3 per share. Dec. 1 Sold 880 shares ..

  What is the ending inventory using dollar value lifo

What is the ending inventory using dollar-value LIFO?- Compute the ending inventory for the years 2006, 2007, 2008, and 2009.

  How would the income recognized in the second year

What theoretical justification is there for Widjaja Companys use of the percentage-of-completion method and how would progress billings be accounted for? Include in your discussion the classification of progress billings in Widjaja Company financia..

  Cost on the balance sheet

inventory method reports the most up-to-date cost on the balance sheet

  Preparing adjusting and subsequent journal entries

The company purchased a building on January 1, 2013. It cost $960,000 and is expected to have a $45,000 salvage value at the end of its predicted 30-year life. Annual depreciation is $30,500.

  What strategies did the management of super bakery

Why did Super Bakerys management believe it was necessary to install an ABC system

  Explian library research assignment

What is the major source of the change in net assets that occurred in 2007 from the change that occurred in 2008? In your opinion, is this trend likely to continue? Why/why not?

  Compute the revenue to be recognized in fiscal year 2014

Compute the revenue to be recognized in fiscal year 2014 for each of the three operating divisions of Van Hatten in accordance with generally accepted accounting principles.

  What is contribution margin per unit-variable expense ratio

Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): What is the contribution margin per unit? What is the contribution margin ..

  Compute the balance in the cash account

Compute the balance in the Cash account at the end of March and What are the total assets of Fieldstone, Inc. at the end of March

  Added new backhoe equipment which has raised fixed costs

Carlos’ Landscaping Company has added new backhoe equipment which has raised fixed costs by $50,000. These backhoes are estimated to have a lifetime of 10 years. Straight-line depreciation is to be used. The additional fixed costs per year are $30,00..

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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