2024 – Kingston Inc management is considering purchasing a new machine at a cost of 3 847 361 They expect

Kingston, Inc. management is considering purchasing a new machine at a cost of $3,847,361. They expect this equipment to produce cash flows of $889,402, $913,431, $887,951, $1,103,872, $1,261,357, and $1,298,868 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this investment? (Enter negative amounts using negative sign e.g. -45.25. Round answer to 2 decimal places, e.g. 15.25.)

 

The NPV is          $

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Briarcrest Condiments is a spice-making firm. Recently, it developed a new process for producing spices. The process requires new machinery that would cost $2,056,046. have a life of five years, and would produce the cash flows shown in the following table.

Year	Cash Flow
1	$444,847
2	-251,566
3	710,132
4	865,222
5	843,412

What is the NPV if the discount rate is 15.07 percent? (Enter negative amounts using negative sign e.g. -45.25. Round answer to 2 decimal places, e.g. 15.25.)

NPV is

$.

 

Problem 10.17

Creative Solutions, Inc., has just invested $5,472,361 on equipment. The firm uses payback period criteria of not accepting any project that takes more than four years to recover its costs. The company anticipates cash flows of $521,437, $851,975, $1,174,854, $1,454,131, $3,186,392, and $2,437,008 over the next six years.(Round answer to 2 decimal places, e.g. 15.25.)

What is the payback period of this investment?

Payback period is  the project.

 

Problem 10.32

Jekyll & Hyde Corp. is evaluating two mutually exclusive projects. The cost of capital is 15 percent. Costs and cash flows are given in the following table.

Year		Project 1		Project 2
0		-$1,246,734		-$1,106,742
1		262,975		319,900
2		319,165		319,900
3		462,330		319,900
4		462,200		319,900
5		798,975		319,900

Calculate NPV and IRR of two projects. (Enter negative amounts using negative sign, e.g. -45.25. Round answer to 2 decimal places, e.g. 15.25 or 12.25%.)

NPV of project 1 is

$

 

Problem 10.10

Capitol Corp. management is expecting a project to generate after-tax income of $65,027 in each of the next three years. The average book value of the project’s equipment over that period will be $258,596. If the firm’s acceptance decision on any project is based on an ARR of 37.5 percent. (Round answer to 2 decimal places, e.g. 5.25%.)

What is the project’s accounting rate of return?

Accounting rate of return is

the project.

 

Problem 10.22

Sycamore Home Furnishings is considering acquiring a new machine that can create customized window treatments. The equipment will cost $282,001 and will generate cash flows of $64,256 over each of the next six years. If the cost of capital is 14.59 percent, what is the MIRR on this project? (Round answer to 2 decimal places, e.g. 15.25%.)

MIRR

.

c. What is the IRR, and what would be the decision based on the IRR? (Round answer to 2 decimal places, e.g. 15.25.)

The IRR of the project is .