Reference no: EM132068249
Champlain Corp. management is investigating two computer systems. The Alpha 8300 costs $3,240,625 and will generate cost savings of $1,051,425 in each of the next five years.
The Beta 2100 system costs $3,248,500 and will produce cost savings of $1,301,750 in the first three years and then $2 million for the next two years. If the company's discount rate for similar projects is 14 percent:
What is the NPV for the two systems? (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors. Round answers to 0 decimal places, e.g. 5,275.)
NPV of Alpha system $Entry field with incorrect answer now contains modified data
NPV of Beta system
Timeline Manufacturing Co. is evaluating two projects. The company uses payback criteria of three years or less. Project A has a cost of $845,140, and project B's cost is $1,190,400. Cash flows from both projects are given in the following table.
Year Project A Project B
1 $86,212 $586,212
2 313,562 413,277
3 427,594 231,199
4 285,552
What are their discounted payback periods? (Round answers to 2 decimal places, e.g. 15.25. If discounted payback period exceeds life of the project, enter 0.00 for the answer.)
Discounted payback periods of project A
Entry field with incorrect answer
Discounted payback periods of project B
Compute the IRR on the following cash flow streams:
a. An initial investment of $25,467 followed by a single cash flow of $40,390 in year 6.(Round intermediate calculations to 4 decimal places, e.g. 1.2512 and final answer to 2 decimal places, e.g. 15.25%.)
b.An initial investment of $1,124,242 followed by a single cash flow of $1,758,300 in year 4.(Round intermediate calculations to 4 decimal places, e.g. 1.2512 and final answer to 2 decimal places, e.g. 15.25%.)
c.An initial investment of $2,278,215 followed by cash flows of $1,672,100 and $1,460,300 in years 2 and 4, respectively.(Round answer to 2 decimal places, e.g. 15.25%.)
Blanda Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. If the firm uses a 9 percent discount rate for production systems projects,
Year System 1 System 2
0 -$12,640 -$45,217
1 12,672 31,860
2 12,672 31,860
3 12,672 31,860
Compute the IRR for both production system 1 and production system 2.(Do not round intermediate calculations. Round answers to 2 decimal places, e.g. 15.25.) IRR of system 1 is % and IRR of system 2 is %.
Which has the higher IRR?
Compute the NPV for both production system 1 and production system 2.(Do not round intermediate calculations. Round answers to 2 decimal places, e.g. 15.25 or 15.25%.)