Calculate net present value for each decision concerning

Assignment Help Financial Management

Reference no: EM131969464

Suppose you can choose between the following projects. Calculate Net Present Value for each and make a decision concerning which is best. Assume the relevant interest rate is 5%.

I. A die cast machine that costs $1,000,000.00 and provides an income stream of $200,000.00 per year for six years.

II. A plastic molding machine that costs $1,000,000.00 and provides an income stream of $250,000.00 per year for five years.

Better project is:

Its NPV is:

Reference no: EM131969464

Questions Cloud

How much was net cash flow : Edwards Electronics recently reported $11,500 of sales, $5,500 of operating costs other than depreciation, and $1,250 of depreciation.

What is the target debt-equity ratio : What is the target debt-equity ratio if the targeted cost of equity (Rs) is 21.8%?

Calculating the effective annual interest rate : Effective annual interest rate: Cyclone Rentals borrowed $15,550 from a bank for three years. If the quoted rate (APR) is 6.75 percent, and the compounding.

What is the firm cost of equity with corporate taxes : Eccles Inc., a zero growth firm, has an expected EBIT of $140,000 and a corporate tax rate of 30%. Eccles uses $500,000 of 12.0% debt.

Calculate net present value for each decision concerning : Calculate Net Present Value for each and make a decision concerning which is best. Assume the relevant interest rate is 5%.

What is the economic ordering quantity and carrying cost : What is the economic ordering quantity? What is the total carrying cost? What will the new average inventory be?

What would be the estimated current price of the stock : Echo Foxtrot's Corp's dividend is currently $2.75 per share. From corporate reports investors estimate that the stock's dividend will grow by a constant rate.

Consider duration hedging using one-year zero coupon bonds : Consider duration hedging using 1-year zero coupon bonds. Find the dollar position.

What is the aftertax salvage value from the sale : Edward's Manufactured Homes purchased some machinery 2 years ago for $51,000. The assets are classified as 5-year property for MACRS.

User Account

All Pages