Details:

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.

Save your workbook using the filename LastnameFirstinitial.ACC350.T# where the # represents the topic number. For example, John Doe would submit assignment #5 using the following name: DoeJ.ACC350.T5.

You are not required to submit this assignment to Turnitin.





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.

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:

???????? Project A: Costs $260,000 and offers seven annual net cash inflows of $57,000.

Kyler Products requires an annual return of 16% on investments of this nature.

???????? Project B: Costs $375,000 and offers 10 annual net cash inflows of $75,000.

Kyler Products demands an annual return of 14% on investments of this nature.

Requirements

1. What is the NPV of each project? Assume neither project has a residual value.

Round to two decimal places.

2. What is the maximum acceptable price to pay for each project?

3. What is the profitability index of each project? Round to two decimal places.

Note: Exercise E26-24 must be completed before attempting Exercise E26-25.




E26-25 Using IRR to make capital investment decisions

Refer to the data regarding Kyler Products in Exercise E26-24. Compute the IRR

of each project and use this information to identify the better investment.