Bba 3301 unit vii assignment

  

BBA 3301 Unit VII Assignment

Instructions: Enter all answers directly in this worksheet. When finished select Save As, and save this document using your last name and student ID as the file name. Upload the data sheet to Blackboard as a .doc, .docx or .rtf file when you are finished.

Question 1: (10 points). (Net present value calculation) Dowling Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $4,000,000 and would generate annual net cash inflows of $900,000 per year for 7 years. Calculate the project’s NPV using a discount rate of 5 percent. (Round to the nearest dollar.)

  

a.   If the discount rate is 5 percent, then the project’s NPV is:

$

Question 2: (30 points). (Net present value calculation) Big Steve’s, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $90,000 and will generate net cash inflows of $19,000 per year for 11 years. To answer Orange item questions, keep the text that is the best answer.

a. What is the project’s NPV using a discount rate of 7 percent? (Round to the nearest dollar.)

  

If the discount rate is 7 percent, then the   project’s NPV is:

$

Should the project be accepted?

  

The project

should be or should not be

accepted   because the NPV is

 

 

positive or negative

and   therefore

adds or subtracts

value   to the firm.

          

b. What is the project’s NPV using a discount rate of 16 percent? 

  

If the discount rate is 16 percent, then the   project’s NPV is:

$

Should the project be accepted? Why or why not?

c. What is this project’s internal rate of return? (Round to two decimal places.)  

  

This project’s internal rate of return is:

%

Should the project be accepted? Why or why not?

  

If   the project’s required discount rate is 7%, then the project

should be or should not be

 

 

accepted   because the IRR is

higher than or lower than

the   required discount rate.

       

  

If   the project’s required discount rate is 16%, then the project

should be or should not be

 

 

accepted   because the IRR is

higher than or lower than

the   required discount rate.

       

Question 3: (15 points). (Related to Checkpoint 11.2) (Equivalent annual cost calculation) Barry Boswell is a financial analyst for Dossman Metal Works, Inc. and he is analyzing two alternative configurations for the firm’s new plasma cutter shop. The two alternatives that are denoted A and B below perform the same task and although they each cost to purchase and install they offer very different cash flows. Alternative A has a useful life of 7 years whereas Alternative B will only last for 3 years. The after-tax cash flows from the two projects are as follows:

a. Calculate each project’s equivalent annual cost (EAC) given a discount rate of 10 percent. (Round to the nearest cent.)

  

a. Alternative A’s equivalent annual cost   (EAC) at a discount rate of 10% is:

$

 

b. Alternative B’s equivalent annual cost   (EAC) at a discount rate of 10% is

$

b. Which of the alternatives do you think Barry should select? Why? (Select the best choice below.) 

a. This cannot be determined from the information provided. 

b. Alternative B should be selected because its equivalent annual cost is less per year than the annual equivalent cost for Alternative A. 

c. Alternative A should be selected because its equivalent annual cost is less per year than the annual equivalent cost for Alternative B. 

d. Alternative A should be selected because it has the highest NPV.  

Text Box: Answer:

Question 4: (10 points). (IRR calculation) What is the internal rate of return for the following project: An initial outlay of $9,000 resulting in a single cash inflow of $15,424 in 7 years. (Round to the nearest whole percent.)

  

a. The internal rate of return for the   project is:

%

Question 5: (10 points). (IRR calculation) Jella Cosmetics is considering a project that costs $750,000 and is expected to last for 9 years and produce future cash flows of $180,000 per year. If the appropriate discount rate for this project is 17 percent, what is the project’s IRR? (Round to two decimal places.)

  

a. The project’s IRR is:

%

Question 6: (10 points) (IRR, payback, and calculating a missing cash flow) Mode Publishing is considering a new printing facility that will involve a large initial outlay and then result in a series of positive cash flows for four years. The estimated cash flows associated with this project are: 

If you know that the project has a regular payback of 2.9 years, what is the project’s internal rate of return? 

  

a. The IRR of the project is:

%

Question 7: (15 points) (Mutually exclusive projects and NPV) You have been assigned the task of evaluating two mutually exclusive projects with the following projected cash flows: 

If the appropriate discount rate on these projects is 11 percent, which would be chosen and why? (Round to the nearest cent.)

  

a. The NPV of Project A is:

$

 

b. The NPV of Project B is:

$

Which project would be chosen and why? (Select the best choice below.)

a. Cannor choose without comparing their IRRs. 

b. Choose A because its NPV is higher. 

c. Choose both because they both have positive NPVs. 

d. Choose B because its NPV is higher.

Text Box: Answer:

   t

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more
Open chat
Hello, welcome to our site. Kindly send us a message and we will be in contact with you right away. "We are simply the best"