142 senseman company has three potential projects from which to choose selected info 4310230

142) Senseman Company has three potential projects from which to choose. Selected information on each of the three projects follows:

Project A

Project B

Project C

Investment required

$ 42,500

$ 56,000

$ 53,700

Net present value of project

$ 45,700

$ 75,400

$ 70,200

Using the profitability index, rank the projects from most profitable to least profitable.

A) A, B, C

B) C, B, A

C) B, A, C

D) B, C, A

143) Silver Creations is evaluating a project that would require an initial investment of $36,000. The present value of the net cash inflows associated with this project would be $43,200. The profitability index for this project would be closest to

A) 0.83.

B) 1.20.

C) 0.20.

D) 5.00.

144) (Present value tables are needed.) Cleveland Cove Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in for repair. The company has narrowed their choices down to two–the B14 Model and the F54 Model. Financial data about the two choices follows.

B14 Model

F54 Model

Investment

$ 320,000

$ 240,000

Useful life (years)

8

8

Estimated annual net cash inflows for useful life

$ 70,000

$ 35,000

Residual value

$ 30,000

$ 10,000

Depreciation method

Straight-line

Straight-line

Required rate of return

14%

10%

What is the total present value of future cash inflows from the F54 Model?

A) $(48,605)

B) $186,725

C) $191,395

D) $167,035

145) (Present value tables are needed.) Cleveland Cove Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in for repair. The company has narrowed their choices down to two: the B14 Model and the F54 Model. Financial data about the two choices follows.

B14 Model

F54 Model

Investment

$ 320,000

$ 240,000

Useful life (years)

8

8

Estimated annual net cash inflows for useful life

$ 70,000

$ 35,000

Residual value

$ 30,000

$ 10,000

Depreciation method

Straight-line

Straight-line

Required rate of return

14%

10%

What is the total present value of future cash inflows from the B14 Model?

A) $15,260

B) $335,260

C) $383,980

D) $191,395

146) (Present value tables are needed.) Cleveland Cove Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in for repair. The company has narrowed their choices down to two: the B14 Model and the F54 Model. Financial data about the two choices follows.

B14 Model

F54 Model

Investment

$ 320,000

$ 240,000

Useful life (years)

8

8

Estimated annual net cash inflows for useful life

$ 70,000

$ 35,000

Residual value

$ 30,000

$ 10,000

Depreciation method

Straight-line

Straight-line

Required rate of return

14%

10%

What is the net present value of the F54 Model?

A) $15,260 positive

B) $48,605 negative

C) $191,395 positive

D) $156,395 positive

147) (Present value tables are needed.) Cleveland Cove Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in for repair. The company has narrowed their choices down to two: the B14 Model and the F54 Model. Financial data about the two choices follows.

B14 Model

F54 Model

Investment

$ 320,000

$ 240,000

Useful life (years)

8

8

Estimated annual net cash inflows for useful life

$ 70,000

$ 35,000

Residual value

$ 30,000

$ 10,000

Depreciation method

Straight-line

Straight-line

Required rate of return

14%

10%

What is the net present value of the B14 Model?

A) $15,260 positive

B) $48,605 negative

C) $5,800 negative

D) $335,260 positive

148) (Present value tables are needed.) Cleveland Cove Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in for repair. The company has narrowed their choices down to two: the B14 Model and the F54 Model. Financial data about the two choices follows.

B14 Model

F54 Model

Investment

$ 320,000

$ 240,000

Useful life (years)

8

8

Estimated annual net cash inflows for useful life

$ 70,000

$ 35,000

Residual value

$ 30,000

$ 10,000

Depreciation method

Straight-line

Straight-line

Required rate of return

14%

10%

Using the net present value model, which alternative should the company select?

A) Neither investment should be selected.

B) The F54 Model should be selected.

C) Both investments should be selected.

D) The B14 Model should be selected.

149) (Present value tables are needed.) The Janus Vending Machine Company is looking to expand its business by adding a new line of vending machines. The management team is considering expanding into either soda machines or snack machines. Following is the relevant financial data relating to the decision:

Soda

Machines

Snack Machines

Investment

$75,000

$50,000

Useful life (years)

5

10

Estimated annual net cash inflows for useful life

$30,000

$18,000

Residual value

$30,000

$10,000

Depreciation method

straight-line

straight-line

Required rate of return

8%

12%

What is the present value of all future cash inflows from the snack machines?

A) $101,700

B) $104,920

C) $75,094

D) $54,920

150) (Present value tables are needed.) The Janus Vending Machine Company is looking to expand its business by adding a new line of vending machines. The management team is considering expanding into either soda machines or snack machines. Following is the relevant financial data relating to the decision:

Soda

Machines

Snack Machines

Investment

$75,000

$50,000

Useful life (years)

5

10

Estimated annual net cash inflows for useful life

$30,000

$18,000

Residual value

$30,000

$10,000

Depreciation method

straight-line

straight-line

Required rate of return

8%

12%

What is the total present value of future cash inflows from the soda machines?

A) $189,930

B) $104,920

C) $62,220

D) $140,220

151) (Present value tables are needed.) The Janus Vending Machine Company is looking to expand its business by adding a new line of vending machines. The management team is considering expanding into either soda machines or snack machines. Following is the relevant financial data relating to the decision:

Soda

Machines

Snack Machines

Investment

$75,000

$50,000

Useful life (years)

5

10

Estimated annual net cash inflows for useful life

$30,000

$18,000

Residual value

$30,000

$10,000

Depreciation method

straight-line

straight-line

Required rate of return

8%

12%

What is the net present value for the snack machines?

A) $(65,220)

B) $104,920

C) $54,920

D

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