User Account

All Pages

Calculate the net present value of projects

Assignment Help Accounting Basics
Reference no: EM13515612

Calculate NPV-rank projects using present value ratios The following capital expenditure projects have been proposed for management's consideration at Heard, Inc., for the upcoming budget year:


Project


Year(s)

A

B

C

D

E

Initial





investment

0

$(50,000)

$(50,000)

$(100,000)

$(100,000)

$(200,000)

Amount of





net cash return

1

10000

0

32000

10000

60000

.

2

10000

0

32000

20000

60000

.

3

10000

20000

32000

30000

30000

.

4

10000

20000

32000

40000

30000

.

5

10000

20000

32000

50000

30000

Per year

6-10

10000

12000

0

0

30000

NPV (14%





discount rate)

2161

$ ?

$ ?

$ ?

5884

Present





value ratio

1.04

?

?

?

?

Required:

a. Calculate the net present value of projects B, C, and D, using 14% as the cost of capital for Heard, Inc.

b. Calculate the present value ratio for projects B, C, D, and E.

c. Which projects would you recommend for investment if the cost of capital is 14% and

1. $100,000 is available for investment?

2. $300,000 is available for investment?

3. $500,000 is available for investment?

d. What additional factors (beyond those considered in parts a-c might influence your project rankings?

Reference no: EM13515612

Questions Cloud

Calculate the present value ratio of each proposal : Calculate the present value ratio of each proposal and indicate which proposal is the most desirable investment.
Explain the physiological effect of the two isomers : Know that biological discrimination based on geometrical isomerism is responsible for the large difference in the physiological effect of the two isomers in muscalure. Can someone explain briefly why
Calculate the payback period of the investment : Calculate the net present value of the proposed investment in the new sewing machine - calculate the present value ratio of the investment.
Evaluate the alkalinity value from the data : A student did an alkalinity determination correctly, except that the sample titrated has a volume of 90.0 mL Volume A was found to be 4.50mL and volume B was 7.00 mL. calculate the alkalinity value from these data and the calculate the correct valu..
Calculate the net present value of projects : Calculate the net present value of projects B, C, and D, using 14% as the cost of capital for Heard, Inc - what additional factors (beyond those considered in parts a-c might influence your project rankings?
Explain bubbled into a solution of barium hydroxide : Hydrogen gas is bubbled into a solution of barium hydroxide that has sulfur in it. The unbalanced chemical equation for the reaction that takes place is:
Depict a lewis dot structure for ketoisophorone : Draw a lewis dot structure for ketoisophorone to figure out how many non bonding pairs of electrons there are in the molecule.
Explain the molecular arrangement of bonds at every carbon : What is the molecular arrangement of bonds at every carbon atom of crotononitrile. (ex like trigonal plant, trigonal pyramidal, linear etc.)
Common fixed expenses and operating income : Organization to the common fixed expenses and operating income of the organization - A system of performance reporting that involves successive degrees of summarization as the number of management levels being reported about increases.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Prepare the bank reconciliation for powers company

Using the following information, prepare the bank reconciliation for Powers Company for May 31, 2013.

  Which interest rate would be better for norman

What difference does it make to Norman and to Robin how much is allocated to interest versus principal if the total of the cash payments will not change? Which interest rate would be better for Norman?

  What is the new equipment recorded at

Equipment costing $10,000 with accumulated depreciation of $7500 is traded for equipment priced at 17,000, minus a trade in allowance of 2,000. What is the new equipment recorded at?

  Find total manufacturing costs assigned to job a-200

Weaver Company's predetermined overhead rate is $18.00 per direct labor-hourand its direct labor wage rate is $12.00 per hour. Tjhe following information pertains to Job A-200.

  Prepare a partial balance sheet for santana at december 31

on december 31 2014 santana company has 7194600 of short-term debt in the form of notes payable to golden state bank

  Problem related to short-term notes payable

On December 31, 2010, Irey Co. has $2,000,000 of short-term notes payable due on February 14, 2011. On January 10, 2011, Irey arranged a line of credit with County Bank which allows Irey to borrow up to $1,500,000 at one percent above the prime ra..

  Record the sale of the subscriptions

Ramsey Company typically sells subscriptions on an annual basis, and publishes six times a year. The magazine sells 60,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?

  Assumptions that underlie financial accounting structure

Explain what is meant by "qualitative characteristics of accounting information"? Example What are the four basic assumptions that underlie the financial accounting structure? Explain.

  Nominal yield to maturity on the investment

Assume that you are considering the purchase of a 15-year bond with an annual coupon rate of 9.5%. The bond has face value of $1,000 and makes semiannual interest payments. If you require an 11.0% nominal yield to maturity on this investment, what..

  Non cash assets and liabilities

Journalize the entries to record the liquidation outlined below,using Assets as the account title for the non cash assets and Liabilities as the account title for all creditors' claims.

  Using the appropriate interest table compute the present

using the appropriate interest table compute the present values of the periodic amounts due at the end of the

  Prepare both of the journal entries to record interest

On January 1, 2010, Carla Industries issued 10% bonds dated January 1, 2010, which has a face amount of 25 million. The bonds mature in 2020. The market rate of interest 12%. The interest is paid on June 30 and December 31.

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