Welcome to Westonci.ca, where finding answers to your questions is made simple by our community of experts. Get quick and reliable solutions to your questions from knowledgeable professionals on our comprehensive Q&A platform. Join our platform to connect with experts ready to provide precise answers to your questions in different areas.
Sagot :
a) The cash payback period for Crane Corporation's investment proposal is 3 years.
b) The annual rate of return for the investment is as follows:
Year 1 = 10% ($10,700/$104,500 x 100)
Year 2 = 19% ($13,100/$69,300 x 100)
Year 3 = 33% ($14,000/$42,100 x 100)
Year 4 = 82.5% ($17,400/$21,100 x 100)
Year 5 = 232% ($17,900/$7,700 x 100)
c) The net present value of the investment by Crane Corporation is $30,643.
Data and Calculations:
Target rate of return = 11%
Year Initial Cost and Book Value Annual Cash Annual Net
Flows Income
0 $104,500
1 69,300 $45,900 $10,700
2 42,100 40,300 13,100
3 21,100 35,000 14,000
4 7,700 30,800 17,400
5 0 25,600 17,900
The cash payback period is 3 years ($104,500 - $45,900 - $40,300 - $35,000).
Net Present Value:
Year Annual Cash Flows PV Factor Present Value
0 -$104,500 1 -$104,500
1 $45,900 0.901 $41,356
2 $40,300 0.812 32,724
3 $35,000 0.731 25,585
4 $30,800 0.659 20,297
5 $25,600 0.593 15,181
Net Present value = $30.643
Learn more about the payback period and NPV at https://brainly.com/question/16999673
#SPJ1
We hope you found this helpful. Feel free to come back anytime for more accurate answers and updated information. Thank you for visiting. Our goal is to provide the most accurate answers for all your informational needs. Come back soon. Thank you for trusting Westonci.ca. Don't forget to revisit us for more accurate and insightful answers.