Merrill Corp. has the following information available about apotential capital investment:
Initial investment $ 2,400,000 Annual net income $ 170,000 Expected life 8 years Salvage value $ 180,000 Merrillâs cost of capital 8 %
Assume straight line depreciation method is used.
Required:
1. Calculate the projectâs net present value. (FutureValue of $1, Present Value of $1, Future Value Annuity of $1,Present Value Annuity of $1.) (Use appropriate factor(s)from the tables provided. Do not round intermediate calculations.Round the final answer to nearest whole dollar.)
2. Calculate the net present value using a 10percent discount rate. (Future Value of $1, Present Value of $1,Future Value Annuity of $1, Present Value Annuity of $1.)(Use appropriate factor(s) from the tables provided. Do notround intermediate calculations. Round the final answer to nearestwhole dollar.)
Merrill Corp. has the following information available about apotential capital investment:
| Initial investment | $ | 2,400,000 | |||||
| Annual net income | $ | 170,000 | |||||
| Expected life | 8 | years | |||||
| Salvage value | $ | 180,000 | |||||
| Merrillâs cost of capital | 8 | % | |||||
Assume straight line depreciation method is used.
Required:
1. Calculate the projectâs net present value. (FutureValue of $1, Present Value of $1, Future Value Annuity of $1,Present Value Annuity of $1.) (Use appropriate factor(s)from the tables provided. Do not round intermediate calculations.Round the final answer to nearest whole dollar.)
2. Calculate the net present value using a 10percent discount rate. (Future Value of $1, Present Value of $1,Future Value Annuity of $1, Present Value Annuity of $1.)(Use appropriate factor(s) from the tables provided. Do notround intermediate calculations. Round the final answer to nearestwhole dollar.)
Related questions
Merrill Corp. has the following information available about a potential capital investment:
| Initial investment | $ | 600,000 | |||||
| Annual net income | $ | 60,000 | |||||
| Expected life | 8 | years | |||||
| Salvage value | $ | 70,000 | |||||
| Merrillâs cost of capital | 7 | % | |||||
Assume straight line depreciation method is used.
Required:
1. Calculate the projectâs net present value. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round the final answer to nearest whole dollar.)
3. Calculate the net present value using a 14 percent discount rate. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round the final answer to nearest whole dollar.)
Merrill Corp. has the following information available about a potential capital investment:
Initial investment $ 2,000,000
Annual net income $ 210,000
Expected life 8 years
Salvage value $ 220,000
Merrillâs cost of capital 10 %
Assume straight line depreciation method is used.
Required:
1. Calculate the projectâs net present value. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round the final answer to nearest whole dollar.)
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2. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 10 percent.
Greater than 10 Percent
Less than 10 Percent
3. Calculate the net present value using a 15 percent discount rate. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round the final answer to nearest whole dollar.)
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4. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 15 percent.
More than 15 percent
Less than 15 percent
Equal to 15 percent
5) Citrus Company is considering a project that has estimated annual net cash flows of $23,430 for four years and is estimated to cost $110,000. Citrusâs cost of capital is 6 percent.
Determine the net present value of the project. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Round your final answer to 2 decimal places.)
6) Vaughn Company has the following information about a potential capital investment:
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