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Please complete the following exercises and/or problems from the textbook: E26-19 E26-20 E26-21 E26-24 E26-25 CP26-38 Prepare your answers in an Excel workbook, using one worksheet per exercise or problem.




Please complete the following exercises and/or problems from the textbook;E26-19;E26-20;E26-21;E26-24;E26-25;CP26-38;Prepare your answers in an Excel workbook, using one worksheet per exercise or problem.;E26-19 Using payback to make capital investment decisions;Robinson Hardware is adding a new product line that will require an investment;of $1,454,000. Managers estimate that this investment will have a 10-year life and;generate net cash inflows of $300,000 the first year, $270,000 the second year;and $260,000 each year thereafter for eight years. Compute the payback period.;Note: Exercise S26-19 must be completed before attempting Exercise S26-20.;E26-20 Using ARR to make capital investment decisions;Refer to the Robinson Hardware information in Exercise E26-19. Assume the;project has no residual value. Compute the ARR for the investment. Round to;two places.;E26-21 Using the time value of money;Janice wants to take the next five years off work to travel around the world. She;estimates her annual cash needs at $28,000 (if she needs more, she will work odd;jobs). Janice believes she can invest her savings at 8% until she depletes her funds.;Requirements;1. How much money does Janice need now to fund her travels?;2. After speaking with a number of banks, Janice learns she will only be able to;invest her funds at 4%. How much does she need now to fund her travels?;E26-24 Using NPV and profitability index to make capital investment decisions;Use the NPV method to determine whether Kyler Products should invest in the;following projects;P26-38 Using payback, ARR, NPV, and IRR to make capital investment;decisions;This problem continues the Davis Consulting, Inc. situation from Problem P25-34;of Chapter 25. Davis Consulting is considering purchasing two different types of;servers. Server A will generate net cash inflows of $25,000 per year and have a zero;residual value. Server A?s estimated useful life is three years and it costs $40,000.;Server B will generate net cash inflows of $25,000 in year 1, $11,000 in year 2;and $4,000 in year 3. Server B has a $4,000 residual value and an estimated life of;three years. Server B also costs $40,000. Davis?s required rate of return is 14%.;Requirements;1. Calculate payback, accounting rate of return, net present value, and internal;rate of return for both server investments. Use Microsoft Excel to calculate NPV;and IRR.;2. Assuming capital rationing applies, which server should Davis invest in?


Paper#77090 | Written in 18-Jul-2015

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