Week 7 Written Assignment - Problems and Exercises

chapter_10_-_p4.xls

Template

P 10-04					Name:
					Section:
Enter the appropriate amount or item in the shaded cells. Use the drop-down lists when available.
An asterisk (*) will appear next to an incorrect entry in the outlined cells.
Leave no cell blank. Ensure to enter "0" wherever applicable. Round PV factors to three decimal places.
1.
a.	Net present value method
	Year		Net Cash Inflows			0	12% Factor		=	Present Value
		0		0		0		0	=		0
		0		0		0		0	=		0
		0		0		0		0	=		0
		0		0		0		0	=		0
		0		0		0		0	=		0
	Total present value										0
	Less purchase price of machine										0
	Net present value										0
b.
	Accounting Rate of Return				=						0	0	0	Average Annual Net Income
														Average Annual Cash inflows
					=						0	0	0	Average Investment Cost
														Total Investment
					=						0			Residual Value
c.
	Payback period method
	Total cash investment							0
	Less cash flow recovery:
	Year
		0				0
		0				0
		0				0
		0				0
								0
	Unrecovered investment							0
	Payback period is					0	years
2.
	Net present value					0
	Accounting rate of return					0
	Payback period					0	years

Enter as a negative value.

Round answer to one decimal place. Ignore "%" in your response. Example "25.6"

Round answer to one decimal place.

Enter as a negative value.

Round answer to one decimal place. Ignore "%" in your response. Example "25.6"

Round answer to one decimal place.

Enter all amounts as positive values in this column.

Enter as a negative value.

P 24-04_Sol			Name:	SOLUTION
			Section:
Enter the appropriate amount or item in the shaded cells. Use the drop-down lists when available.
An asterisk (*) will appear next to an incorrect entry in the outlined cells.
Leave no cell blank. Ensure to enter "0" wherever applicable. Round PV factors to three decimal places.
1.
a.	Net present value method
	Year	Net Cash Inflows	x		12% Factor	=	Present Value
	1	$ 75,000	x		0.893	=	$ 66,975
	2	70,000	x		0.797	=	55,790
	3	65,000	x		0.712	=	46,280
	4	60,000	x		0.636	=	38,160
	4	25,000	x		0.636	=	15,900
	Total present value						$ 223,105
	Less purchase price of machine						250,000
	Net present value						$ (26,895)
b.
	Accounting Rate of Return		=		Average Annual Net Income			/	Average Investment Cost	Average Annual Net Income
										Average Annual Cash inflows
			=		$ 11,250			/	$ 137,500	Average Investment Cost
										Total Investment
			=		8.2%					Residual Value
c.
	Payback period method
	Total cash investment				$ 250,000
	Less cash flow recovery:
	Year
	1		$ 75,000
	2		70,000
	3		65,000
	4		40,000
					(250,000)
	Unrecovered investment				0
	Payback period is		3.7		years
2.
	Net present value		$ (26,895)
	Accounting rate of return		8.2%
	Payback period		3.7		years

Round answer to one decimal place. Ignore "%" in your response. Example "25.6"

Enter as a negative value.

Round answer to one decimal place.

Enter as a negative value.

Round answer to one decimal place. Ignore "%" in your response. Example "25.6"

Round answer to one decimal place.

Enter all amounts as positive values in this column.

Enter as a negative value.