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Timeline Manufacturing Co

Finance

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Timeline Manufacturing Co. is evaluating two projects. The company

uses payback criteria of three years or less. Project A has a cost of $989,940, and project B's cost is $1,110,800. 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?

Management of Sycamore Home Furnishings is considering acquiring a

new machine that can create customized window treatments. The equipment will cost $314,550 and will generate cash flows of $96,750 over each of the next six years. If the cost of capital is 12 percent, what is the MIRR on this project? (Round intermediate calculations to 4 decimal places, e.g. 1.2514. Round answer to 2 decimal places, e.g. 15.25%.)

A firm has an opportunity to invest in a new device that will replace

two of the firm's older machines. The new device costs $500,000 and requires an additional outlay of $30,000 to cover installation and shipping. The new device will cause the firm to increase its net working capital by $10,000. Both of the old machines can be sold—the first for $120,000 (book value equals $105,000) and the second for $150,000 (book value equals $115,000). The original cost of the first machine was $220,000, and the original cost of the second machine was $140,000. The firm's marginal tax bracket is 40 percent. Compute the net investment for this project. Round your answer to the nearest dollar.


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