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investment’s cash flows. Greene is entitled to the 20X3 dividend. b. Compute the investment’s net present value, rounding calculations to the nearest dollar. c. Given the results of part (b), should Greene have acquired the Heartland stock? Briefly explain. The City of Bedford is studying a 600acre site on Route 356 for a new landfill. The startup cost 
Please complete the following 5 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations witn Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button. 1. Calculate the present value of the following cash flows, rounding to the nearest dollar: a. A single cash inflow of $12,000 in five years, discounted at a 12% rate of return. b. An annual receipt of $16,000 over the next 12 years, discounted at a 14% rate of return. c. A single receipt of $15,000 at the end of Year 1 followed by a single receipt of $10,000 at the end of Year 3. The company has a 10% rate of return. d. An annual receipt of $8,000 for three years followed by a single receipt of $10,000 at the end of Year 4. The company has a 16% rate of return. On January 2, 20X1, Bruce Greene invested $10,000 in the stock market and purchased 500 shares of Heartland Development, Inc. Heartland paid cash dividends of $2.60 per share in 20X1 and 20X2; the dividend was raised to $3.10 per share in 20X3. On December 31, 20X3, Greene sold s holdings and generated proceeds of $13,000. Greene uses the netpresent value method and desires a 16% return on investments. a. Prepare a chronological list of the investment’s cash flows. Greene is entitled to the 20X3 dividend. b. Compute the investment’s net present value, rounding calculations to the nearest dollar. c. Given the results of part (b), should Greene have acquired the Heartland stock? Briefly explain. The City of Bedford is studying a 600acre site on Route 356 for a new landfill. The startup cost has been calculated as follows: Purchase cost: $450 per acre Site preparation: $175,000 The site can be used for 20 years before it reaches capacity. Bedford, wch shares a facility in Bath Townsp with other municipalities, estimates that the new location will save $40,000 in annual operating costs. a. Should the landfill be acquired if Bedford desires an 8% return on its investment? Use the netpresentvalue method to determine your answer. STL Entertainment is considering the acquisition of a sightseeing boat for summer tours along the Mississippi River. The following information is available: Cost of boat $500,000 Service life 10 summer seasons Disposal value at the end of 10 seasons $100,000 Capacity per trip 300 passengers Fixed operating costs per season (including straightline depreciation) $160,000 Variable operating costs per trip $1,000 Ticket price $5 per passenger All operating costs, except depreciation, require cash outlays. On the basis of similar operations in other parts of the country, management anticipates that each trip will be sold out and that 120,000 passengers will be carried each season. Ignore income taxes. By using the netpresentvalue method, determine whether STL Entertainment should acquire the boat. Assume a 14% desired return on all investments round calculations to the nearest dollar. Columbia Enterprises is studying the replacement of some equipment that originally cost $74,000. The equipment is expected to provide six more years of service if $8,700 of major repairs are performed in two years. Annual cash operating costs total $27,200. Columbia can sell the equipment now for $36,000; the estimated residual value in six years is $5,000. New equipment is available that will reduce annual cash operating costs to $21,000. The equipment costs $103,000, has a service life of six years, and has an estimated residual value of $13,000. Company sales will total $430,000 per year with either the existing or the new equipment. Columbia has a minimum desired return of 12% and depreciates all equipment by the straightline method. a. By using the netpresentvalue method, determine whether Columbia should keep its present equipment or acquire the new equipment. Round all calculations to the nearest dollar, and ignore income taxes. b. Columbia’s management feels that the time value of money should be considered in all longterm decisions. Briefly discuss the rationale that underlies management’s belief.
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