Easton Corporation is involved in the evaluation of a new computer-integrated manufacturing system. The system has a projected initial cost of $1,000,000. It has an expected life of six years, with no salvage value, and is expected to generate annual cost savings of $250,000. Based on Easton Corporation's analysis, the project has a net present value of $57,625. 1. Refer to Rhodes Corporation. What discount rate did the company use to compute the net present value? Present value tables or a financial calculator are required.
a. 10 %
b. 11 %
c. 12 %
d. 13 %
2. Refer to Rhodes Corporation. What is the project's profitability index?
a. 1.058
b. .058
c. .945
d. 1.000
3. Refer to Rhodes Corporation. What is the project's internal rate of return? Present value tables or a financial calculator are required.
a. between 12.5 and 13.0 percent
b. between 11.0 and 11.5 percent
c. between 11.5 and 12.0 percent
d. between 13.0 and 13.5 percent

Answer and Explanation:

1. The discount rate is

If we go through the options

like we assume 10%

So, the net present value is

= ($250,000 × 4.3553) - $1,000,000

= $1,088,825 - $1,000,000

= $88,825

Now if the discount rate is 11%

So, the net present value os

=  ($250,000 × 4.2305) - $1,000,000

= $1,057,625 - $1,000,000

= $57,625

So the net present value is $57,625

2. The profitability index is

= ($1,000,000 + $57,625) ÷ ($1,000,000)

= 1.058

3. The internal rate of return is

It is 12.98% that lies between 12.5% and 13%

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.

the answer is true

for e2020 ; -;