Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Hook Industries is considering replacement of one of its drill presses. Three substitute replacement presses are under consideration. Relevant cash flows associated with each are shown in the given table below. Firm’s cost of capital is 15%.

                              Press A     Press B        Press C
Initial Investment        $85,000    $60,000    $130,000
Years                        Cash Flow
1                             $18,000    $12,000    $50,000
2                             $18,000    $14,000    $30,000
3                             $18,000    $16,000    $20,000
4                             $18,000    $18,000    $20,000
5                             $18,000    $20,000    $20,000
6                             $18,000    $25,000    $30,000
7                             $18,000    ---------  $40,000
8                             $18,000    ---------  $50,000

a. Compute the net present value of each press

b. Using NPV, find out the acceptability of each project

c. Rank project from best to worst by using NPV

d. Compute the profitability index (PI) for each press

e. Rank presses from best to worst by using  PI.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M91557

Have any Question? 


Related Questions in Basic Finance

Milgram conducted his experiments on obedience in the days

Milgram conducted his experiments on obedience in the days before all research was scrutinized by an Institutional Review Board. Imagine, however, that Milgram had submitted his research proposal to an IRB of which you w ...

In early 2010 newspapers reported that nba superstar kobe

In early 2010, newspapers reported that NBA superstar Kobe Bryant had signed an extension to his existing contract. His salaries in future years under the contract extension would be as follows: For the season ending in ...

Sankey inc has current assets of 6000 net fixed assets of

Sankey, Inc., has current assets of $6,000, net fixed assets of $23,200, current liabilities of $5,600, and long-term debt of $13,600. (Do not round intermediate calculations.) What is the value of the shareholders' equi ...

Assignment 1 - mini case amgen corporationthe amgen

Assignment 1 - MINI CASE: AMGEN CORPORATION The Amgen Corporation spent several years working on developing a product that can be used to provide a healthy supplement to a variety of food products.  The benefits of a new ...

Name the two ways in which joints loaded in shear resist

Name the two ways in which joints loaded in shear resist loads ? Which kind is slip-critical? Which kind requires control of bolt preload during assembly? What are typical coefficients of friction for slip-critical joint ...

Ace investment company is considering the purchase of the

Ace Investment Company is considering the purchase of the Apartment Arms project. Next year's NOI and cash flow is expected to be $2,000,000, and based on Ace's economic forecast, market supply and demand and vacancy lev ...

Explain how a short call added to a protective put forms a

Explain how a short call added to a protective put forms a collar and how it changes the payoff and up-front cost? Explain the process by which the profit of a short straddle closed out prior to expiration is influenced ...

Why might households and firms in a foreign country prefer

Why might households and firms in a foreign country prefer to use U.S. dollars rather than their own country's currency in making transactions? What advantages or disadvantages do foreign governments experience because o ...

Backgroundthe facebook group announced that it raised

Background The Facebook group announced that it raised between $10 million to $12 million in first-round financing led by Accel Partners on April 15, 2005. As a part of the transaction, Jim Beyers, a Managing Partner at ...

Given the following informationcurrent stock price 35stock

Given the following information: Current stock price $35 Stock beta: 2 Risk-free rate: 4% Market risk premium: 6% Expected dividend, D 1 : $3.00 Expected long-run growth rate of dividends: 6% What is the required return ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro