NPV Simes Innovations, Inc

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 NPV Simes Innovations, Inc., is negotiating to purchase exclusive rights to manufacture and market a solar-powered toy car. The car's inventor has offered Simes the choice of either a one-time payment of $1,600,000 today or a series of 6 year-end payments of $385.000. a. If Simes has a cost of capital of 13%, which form of payment should it choose? b. What yearly payment would make the two offers identical in value at a cost of capital of 13%? c. What would be your answer to part a of this problem if the yearly payments were made at the beginning of each year? d. The cash inflows associated with this purchase are projected to amount to $250.250 per year for 15 years. Will this factor change the firm's decision about how to fund the initial investment? a. If Simes has a cost of capital of 13%, the present value of the annuity is $. (Round to the nearest dollar) Which form of payment should the firm choose? (Select the best answer below.) O A. Annuity payment B. Lump sum payment b. The yearly payment that would make the two offers identical in value at a cost of capital of 13% is $. (Round to the nearest collar.) C. If the yearly payments were made at the beginning of each year, the present value of the annuity is $] (Round to the nearest dollar.) Which form of payment should the firm choose if the annuity payments are paid at the beginning of each year? (Select the best answer below) O A. Lump sum payment OB. Annuity payment d. The after-tax cash inflows associated with this purchase are projected to amount to $250,250 per year for 15 years. Will this factor change the firm's decision about how to fund the initital investment? (Select the best answer below.) O A. No, the cash flows from the project will not influence the decision on how to fund the project. The investment and financing decisions are separate OB. Yes, the cash flows from the project will influence the decision on how to fund the project. The investment and financing decisions are related NPV and maximum return Afirm can purchase new equipment for $31,000 that generates an annual cash inflow of $8,000 for 7 years. a. Determine the net present value (NPV) of the asset, assuming that the firm has a cost of capital of 12%. Is the project acceptable? b. Determine the maximum required rate of return that the firm can have and still accept the asset. TEE a. The net present value (NPV) of the new equipment is s. (Round to the nearest cent.) Based on its NPV, is the new equipment acceptable? (Select the best answer below) Yes No b. The maximum required rate of return the firm can have and still accept the new equipment is %. (Round to two decimal places.)