unit3_problems

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annual , e n d- of - ye ar, book i nv est m e nt a c c ou nt s . 5. Avera ge Ac c o u n t i n g R et u r n Yo u r f i rm ìs c on si d eri n g p u rch as in g a m ach i n e w \M M e to \ \ ow in g the discou nt rate i s 7 p e rc e nt ? \f i t i s 2 1 p e rc e nt ? of $4, 3oo for s ix ye a rs . What i s th e d is c o u n te d p a yb a c k p e r i od it th e d i s c ou n t ra te \s o p e rc en ť ł w h at u

4. calc u lat i n g D i s c o u n t e d P a y b a c k A n i n v e s tm e nt p roje ct cosH $16 , ooo and h a s a nn u al c a s h 1 \ ow s

cash flow s if th e in i t ia l c ost i s $9 , 000? What i t th e i n M a l c ost i s $ 13 , 000?wha t \t \t i s $ 17 , 000?

$6, 7oo, a n d $5, 900, a n d a d i sc o u nt rat e ot 12 p e rc e nt . Wha t i s th e d is cou nted p ayb a ck p eri o d t or m e s e

3. calc u l at i n g D i s c o u n t e d P a y b a c k An i n v e s tm e n t p roje ct h a s a n n u a \ c a sh ìn l l ow s o ĺ $ 5 , 8oo , $612oo ,

it is $7, 900? What is th e p roje

c t p a yb ac k p e r i o d if th e i n i t ia l c o s t i s $ 3 , 200? What ìt th e i n \üa \ c ost \s $ 4 , 600? Wha t \t t . calc u l a

t i n g p a y b a c k A n i n v e st m e nt p roje ct p rov i d e s c a sh i nt\ow s ot $ 82 5 p e r y e a r t o r e i g h t y e a rs .

if the a pp ro p r ia te d i s c o u n t ra te i s 15 p e rc e nt ?

b. suppose th e c o m p a n y u s e s th e N P V ru l e t o ra n k th e s e tw o p roje c ts . which p ro je ct s h o u l d b e c h o s e n

ch osen? a · suppo

se t h e c o m p a n y ' s pa yb a c k p e r i o d c u t oĦ i s tw o y e a rs . which ot th e s e t w o p roiecķ sh o u \ d b e

3 2, 800 4, 1 00

2 6, 800 4, 200

8, 500 4, 700

0 $14, 500 $9, 800

回国 p R o “竺 Y P R o ，竺 1. ca

lcu l at i n g p ay

b a c k P e r i o d a n d N P v Tr i s ta r , In c . , ha s th e f o \ \ ow i n g m u tu a \ \ y ex c \ u s iv e p r o te c t s .

OUE STI O N

S A N D P R O B L E M S

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c a s h i n fl o w o c c u rs a t th e e n d o f th e írs t y e a r. As s u m e th e re q u i re d ret u rn is 15 p e rce nt . What is lhepro je c t 's Pl? Sh

s e ve n y e a r s a fte r w h i c h h e p la n s to s c ra p th e e q u ip m e n t a n d re t i re to t h e b e a c h e s o f Nevis . Thg l irsl

g r o o m i n g e q u ip m e n t w i l l c o s t $ 了 8 5 , 000. Bi l l e x p e c ts a f te r ta x c a s h i n f lo w s o f $ 6 2 , 000 anmial ly ïor

g Cal cu at mg p r o l rt a b i l i u I n d e x e i rr p la n s to o p e n a s e l f - s e r v e g r o o m i n g c e nt e r i n a s t o r e fr o m . The

3 2, 200 1, 800 2 3, 200 2, 1 0 0

1, 800 1, 3 00 0 $5, 200 $3, 6 0 0

YE A R P R OJ E C T A P R O J E C T B

CA S H F L O W S «$ )

8. Ca l c u ja » n g I R R c o m p u te r a te o f r e t u r n fo r t h e c a s h f l o w s o f t h e f o l o w 1 n g tw o D

H a r ry d u t e p [ m e p r o e c t ' ° =

D e r

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