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Current Attempt in Progress The Management of Pharoah Manufacturing Company is evaluating two forklift systems to use in its plant that produces the towers for a windmill power farm

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Current Attempt in Progress The Management of Pharoah Manufacturing Company is evaluating two forklift systems to use in its plant that produces the towers for a windmill power farm. The costs and the cash flows from these systems are shown below. The company uses a 8 percent discount rate for all projects. Year 0 Year 1 Year 2 Year 3 Otis Forklifts $-3,107,450 $986,225 $1,356,886 $2,131,497 Craigmore Forklifts $-4,127,410 $880,236 $1,758,225 $2,855,110 NPV Otis forklift $661,083 Craigmore Forklifts $461,496 Compute the IRR for each of the two systems. (Round intermediate calculation to 0 decimal places, e.g. 1,525 and final answers to 2 decimal places, e.g. 15.10%.) IRR Otis forklift Craigmore Forklifts enter percentages rounded to 2 decimal places % enter percentages rounded to 2 decimal places % Is the investment decision different from the one determined by NPV? The investment decision is select an option determined by NPV. Save for Later from the one Attempts: 0 of 2 used 2. Current Attempt in Progress You are considering a project that has an initial outlay of $2.4 million. The profitability index of the project is 2.74. What is the NPV of the project? NPV $enter the NPV in dollars Save for Later 3. Current Attempt in Progress Blossom Solutions, Inc., has just invested $5,260,700 in new equipment. The firm uses a payback period criteria of rejecting any project that takes more than four years to recover its costs. Management anticipates cash flows of $647,800, $723,100, $840,100, $1,228,300, $2,330,300, and $2,032,100 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 enter a number of years for the payback period rounded to 2 decimal places years. Should Blossom Solutions, Inc. go ahead with this project? The firm select an option Save for Later the project. Attempts: 0 of 2 used Submit Answer 4. Current Attempt in Progress Blossom 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. The firm uses a 7 percent discount rate for production systems. Year System 1 System 2 0 -$12,730 -$44,975 1 12,745 30,140 2 12,745 30,140 3 12,745 30,140 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 enter the IRR of System 1 in percentages rounded to 2 decimal places % and IRR of system 2 is enter the IRR of System 2 in percentages rounded to 2 decimal places %. Which has the higher IRR? select a system has 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.) NPV of system 1 is $enter the NPV of System 1 in dollars rounded to 2 decimal places and NPV of system 2 $enter the NPV of System 2 in dollars rounded to 2 decimal places . Which production system has the higher NPV? select a system View Policies 5. Current Attempt in Progress has higher NPV. Suppose that you could invest in the following projects but have only $29,630 to invest. How would you make your decision and in which projects would you invest? Project Cost NPV A $ 8,080 $ 3,200 B 10,570 6,890 C 8,700 4,310 D 6,890 3,970 You should invest in project(s) select the projects Save for Later View Policies . 6. Current Attempt in Progress The Management of Blossom Manufacturing Company is evaluating two forklift systems to use in its plant that produces the towers for a windmill power farm. The costs and the cash flows from these systems are shown below. The company uses a 10 percent discount rate for all projects. Year 0 Year 1 Year 2 Year 3 Otis Forklifts $-3,109,450 $961,225 $1,366,886 $2,099,497 Craigmore Forklifts $-4,136,410 $876,236 $1,781,225 $2,850,110 Calculate net present value (NPV). (Enter negative amounts using negative sign e.g. -45.25. Do not round Discount factors.Round other intermediate calculations and final answers to 0 decimal places, e.g. 1,525.) NPV Otis forklift $enter a dollar amount rounded to 0 decimal places Craigmore Forklifts $enter a dollar amount rounded to 0 decimal places Determine which forklift system should be purchased. select the forklift system Save for Later forklift system should be purchased. Attempts: 0 of 2 used Submit Answer 7. Current Attempt in Progress Sheridan Crafts Corp. management is evaluating two independent capital projects that will each cost the company $290,000. The two projects will provide the following cash flows: Year Project A Project B 1 $82,750 $45,600 2 97,450 78,125 3 36,235 178,900 4 133,655 78,110 (a1) What is the payback period of both projects? (Round answers to 2 decimal places, e.g. 15.25.) The Payback of Project A is enter a number of years for the Payback of Project A rounded to 2 decimal places years and Project B is enter a number of years for the Payback of Project B rounded to 2 decimal places Save for Later View Policies 8. Current Attempt in Progress years. Wildhorse Corp. management is considering purchasing a machine that will cost $117,250 and will be depreciated on a straight-line basis over a five-year period. The sales and expenses (excluding depreciation) for the next five years are shown in the following table. The company’s tax rate is 34 percent. Year 1 Year 2 Year 3 Year 4 Year 5 Sales $128,450 $182,875 $238,455 $260,440 $267,125 Expenses $137,410 $121,488 $145,289 $142,112 $137,556 Wildhorse will accept all projects that provide an accounting rate of return (ARR) of at least 45 percent. (a1) Calculate accounting rate of return. (Round answer to 1 decimal place, e.g. 15.2%.) Accounting rate of return View Policies enter the Accounting rate of return in percentages rounded to 1 decimal place 9. Current Attempt in Progress Given the following cash flows for a capital project, calculate the NPV and IRR. The required rate of return is 8 percent. Year 0 Cash Flows 1 $-46127 2 $13550 3 $17650 4 $24900 5 $8700 $5450 NPV=11422. IRR=10.9% NPV=5926. IRR=18.1% NPV=5926. IRR=10.9% NPV=11422. IRR=18.1% 10. Current Attempt in Progress Pharoah Specialties just purchased inventory-management computer software at a cost of $1,771,950. Cost savings from the investment over the next six years will produce the following cash flow stream: $203,340, $253,240, $322,600, $544,250, $782,320, and $604,740. What is the payback period on this investment? (Round answer to 2 decimal places,e.g. 15.25.)