Ch 9-1 The expected cash flows for a project are as follows. The required return is 12 percent. Calculate the Internal Rate of Return and state whether the project should be accepted or rejected. 0 (32,000) 1 14,000 2 15,750 3 11,250 The expected cash flows for a project are shown below. Ch 9-2 a Calculate the NPV with a 14% required rate of return and state whether the project should be accepted or rejected. Ch 9-2 b Calculate the NPV with a 20% required rate of return and state whether the project should be accepted or rejected. 0 (38,500) 1 16,750 2 20,250 3 17,500 Ch 10-1 Calculating Projected Net Income [LO1] A proposed new investment has projected sales of $740,000. Variable costs are 46 percent of sales, and fixed costs are $225,000; depreciation is $78,000. Ch 10-1 Prepare a proforma income statement assuming a tax rate of 32 percent. What is the projected net income? Project Evaluation [LO1] A company is looking at a new production system with an installed cost of $725,000. This cost will be depreciated
in equal installments over the projectΒs five-year life, at the end of which the system will retain a salvage value of $125,000. The system will save the firm $275,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $38,000. Ch 10-2 If the tax rate is 36 percent and the discount rate is 12 percent, what is the NPV of this project? Calculating Break-Even [LO3] In each of the following cases: Calculate the accounting break-even and the cash break-even points. Ignore any tax effects in calculating the cash break-even. Ch 11-1a Ch 11-2 a Ch 11-3 a 2,200 1,850 6,000,000 2,200,000 50 42 150,000 145,000 275 210 16,250 18,750 Using Break-Even Analysis [LO3] Consider a project with the following data: accounting break-even quantity = 15,400 units; cash break-even quantity = 12,200 units; project life = 6 years; fixed costs = $220,000; variable costs = $34 per unit; required return = 10 percent. Ignore the effect of taxes. Ch 11-2 Find the financial break-even quantity.