Solution-Schedules of prospective operating cash inflows

Schedules of prospective operating cash inflows

Reference no: EM131055710

The following table shows two schedules of prospective operating cash inflows, each of which requires the same net initial investment of $10,000 for a new system now:

Annual Cash Inflows

Year Plan A Plan B

1 $1,000 $5,000

2 2,000 4,000

3 3,000 3,000

4 4,000 2,000

5 5,000 1,000

Total $15,000 $15,000

The required rate of return is 6%. All cash inflows occur at the end of each year. The initial investment has a five-year life with $0 residual value at the end of the fifth year.

Compute the following (show your computation)

Net present value
Payback period
Internal rate of return (use Excel)
Accounting rate of return based on net initial investment (Assume straight-line depreciation.)
Which plan is more desirable using these four methods? Explain. (use the cutoff period of 3 years for payback period.)

Reference no: EM131055710

Questions Cloud

Calculate the stocks coefficient of variation : Expected return A stock's returns have the following distribution: Demand for the Company's Products Probability of This Demand Occurring Rate of Return If This Demand Occurs Weak 0.2 -38% Below average 0.2 -7 Average 0.4 15 Above average 0.1 30 Stro..

Occurrence rate of return expected rate of return : State of the Economy Probability of Occurrence Rate of Return Expected Rate of Return E[R] Standard Deviation Coefficient of Variation Very poor 0.10 -10% Poor 0.20 0% Average 0.40 10% Good 0.20 20% Very Good 0.10 30%

Create a chart of differences between us and soviet union : Directions: Create a chart of 10 ideological differences between the United States and the Soviet Union.

Buying stock with a market order : Buying Stock with a Market Order You would like to buy shares of Ralph Lauren (RL). The current bid and ask quotes are $85.26 and $85.46, respectively. You place a market buy-order for 200 shares that executes at these quoted prices. How much money d..

Schedules of prospective operating cash inflows : The following table shows two schedules of prospective operating cash inflows, each of which requires the same net initial investment of $10,000 for a new system now:

Eduardo halfon titled his novel the polish boxer : Eduardo Halfon opens his novel, The Polish Boxer, with an epigraph from Henry Miller: "I have moved the typewriter into the other room where I can see myself in the mirror as I write." Write an essay explaining and interpreting the significance of..

Determine the interest payment for the bonds : Determine the interest payment for the following three bonds- 3.95 percent coupon Treasury note. Corporate zero coupon bond maturing in ten years.

Company current stock price : The company's beta is 1.1, the market risk premiumis 5.5%, and the risk-free rate is 3.5%. What is the company's current stock price? [Hint: find required rate of return first andthen stock price.]

How do ethical leaders differ from other leaders : What is an ethical leader and how do ethical leaders differ from other leaders? What are the factors that promote or hinder the development of ethical leadership in organisations

User Account

All Pages

Schedules of prospective operating cash inflows

Reference no: EM131055710

Reference no: EM131055710

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

Financial reporting and analysis

A report on financial accounting

Describe the types of financial ratios

Differences between sole proprietorship and corporation

Prepare a cash budget statement

What are the implied interest rates

State pricing theory and no-arbitrage pricing theory

Small business administration

Effect of financial leverage

Evaluate the basis for the payment to the lender

Importance of opps, ipps, mpfs and dmepos

Time value of money

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT