Cashback Offer (15th - 25th November 2020). Get Flat 10% Cashback credited in your account on a minimum transaction of $80. Post Your Question

Question DetailsNormal
$ 15.00

Gomez Corporation is considering two alternative investment proposals with the following data

Question posted by
Online Tutor Profile
request

Directions: Your assignment this week is to answer the four questions below. Please note that Question #1 has 2 parts, Part A and Part B. Please show your work for full credit and use the box provided. Please add more rows or columns to the box if needed.

1.Gomez Corporation is considering two alternative investment proposals with the following data:

Proposal X Proposal Y
Investment $850,000 $468,000
Useful life 8 years 8 years
Estimated annual net $125,000 $78,000
cash inflows for 8 years
Residual value $40,000 $ -
Depreciation method Straight-line Straight-line
Required rate of return 14% 10%

1a. How long is the payback period for Proposal X?

1b. What is the accounting rate of return for Proposal Y?

2. You have been awarded a scholarship that will pay you $500 per semester at the end of each of the next 8 semesters that you earn a GPA of 3.5 or better. You are a very serious student and you anticipate receiving the scholarship every semester. Using a discount rate of 3% per semester, which of the following is the correct calculation for determining the present value of the scholarship? PLEASE STATE WHY YOU CHOSE THE ANSWER THAT YOU DID.
A) PV = $500 × 3% × 8
B) PV = $500 × (Annuity PV factor, i = 3%, n = 8)
C) PV = $500 × (Annuity FV factor, i = 6%, n = 4)
D) PV = $1,000 × (PV factor, i = 3%, n = 4)

3. Maersk Metal Stamping is analyzing a special investment project. The project will require the purchase of two machines for $30,000 and $8,000 (both machines are required). The total residual value at the end of the project is $1,500. The project will generate cash inflows of $11,000 per year over its 8-year life.

If Maersk requires a 6% return, what is the net present value (NPV) of this project? (Use present value tables or Excel.)

4. Hincapie Manufacturing is evaluating investing in a new metal stamping machine costing $30,924. Hincapie estimates that it will realize $12,000 in annual cash inflows for each year of the machine's 3-year useful life.

Approximately, what is the the internal rate of return (IRR) for the machine? (Use present value tables or Excel.)

Available Answer
$ 15.00

[Solved] Gomez Corporation is considering two alternative investment proposals with the following data

  • This Solution has been Purchased 2 time
  • Submitted On 16 Dec, 2014 11:22:31
Answer posted by
Online Tutor Profile
solution

This Tutorial is rated A+ p...

Buy now to view the complete solution
Other Similar Questions
User Profile
smart...

Gomez Corporation is considering two alternative investment proposals with the following data

This Tutorial is rated A+ previously,if you have any questions regarding this tutorial than you can contact me.

...

The benefits of buying study notes from CourseMerit

homeworkhelptime
Assurance Of Timely Delivery
We value your patience, and to ensure you always receive your homework help within the promised time, our dedicated team of tutors begins their work as soon as the request arrives.
tutoring
Best Price In The Market
All the services that are available on our page cost only a nominal amount of money. In fact, the prices are lower than the industry standards. You can always expect value for money from us.
tutorsupport
Uninterrupted 24/7 Support
Our customer support wing remains online 24x7 to provide you seamless assistance. Also, when you post a query or a request here, you can expect an immediate response from our side.
closebutton

$ 629.35