Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
XYZ manufacturing company is planning to purchase new equipment. It is deciding between 2 options: Machine 1 and Machine 2. Machine 1 has a 7-year working lifespan, while Machine 2 has a 5-year working lifespan. Cash flows are provided for each machine. The final cash-flow includes the residual value of the machine.
a) Calculate the NPV of both machines using a 10% discount rate. Which machine has the highest NPV? (Copy and paste the tables into the answer panel and populate)
Machine 1
Year
Net Cash Flow ($)
Discount Factor
Discounted Cash Flow
0
-400000
1
70,000
2
72,000
3
36,000
4
81,000
5
87,000
6
53,000
7
219,000
NPV
$
Machine 2
-300000
75,000
80,000
40,000
142,500
b) You are not entirely comfortable comparing the two machines based on NPV due to their different lifespans, so you decide to compare them using Equivalent Annual Annuity (EAA). The equivalent annual annuity formula is used in capital budgeting to show the net present value of an investment as a series of equal cash flows for the length of the investment. It provides a way to factor in the length of an investment. Using the EAA formula, calculate the equivalent annual annuity for the two machines. Based on this measure, which machine is better? (Show your working)
Machine 1 EAA =
Machine 2 EAA =
Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..
This report is specific for a core understanding for Financial Accounting and its relevant factors.
Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.
Briefly describe the major differences between a sole proprietorship and a corporation
Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month
What are the implied interest rates in Europe and the U.S.?
State pricing theory and no-arbitrage pricing theory
Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.
The Effect of Financial Leverage and working capital management
Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.
Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.
Time Value of Money project
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd