a cost of $19,800. The payback period for this investment is: a) 3.9 years b) 3 years, Hung Company accumulates the following data concerning a proposed capital investment: cash cost of $216, 236, net annual cash flows of $43,800, and present value factor of cash inflows for 10 years 5.22 (rounded). Axe anticipates annual net income after taxes of $1,500 from selling the product produced by the new machin, A company can buy a machine that is expected to have a three-year life and a $21,000 salvage value. Negative amounts should be indicated by a minus sign.) The investment costs $57,600 and has an estimated $6,000 salvage value. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. The company's required, A company is considering a proposal that requires an initial investment of $91,100, has predicted net cash inflows of $30,000 per year for four years and no salvage value. For l6, = 8%), the FV factor is 7.3359. The new present value of after tax cash flows from an investment less the amount invested. The lease term is five years. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. The investment costs $48,000 and has an estimated $10,200 salvage value. The investment costs $45,600 and has an estimated $8,700 salvage value. Solution: Annual depreciation = (Cost - Salvage value) / useful life = ($45,600 - $8,700) / 3 = $12,300 Annual cash i. What is the depreciation expense for year two using the straight-line method? Peng Company is considering an investment expected to generate an average net income after taxes of $3,100 for three years. 6 years c. 7 years d. 5 years. Avocado Company has an operating income of $100,000 on revenues of $1,000,000. 1. If t, Your company just bought an asset for $200,000 with an estimated useful life of 5 yrs, and a salvage value of $10,000. The company is expected to add $9,000 per year to the net income. If the value of leased asset is $125 and the cost of debt is 10%, what is the, The cost of capital for a firm is 10 percent. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Compute this machine's accou, A machine costs $300,000 and is expected to yield an after-tax net income of $9,000 each year. The system requires a cash payment of $125,374.60 today. The projected incremental income from the investment is as follows: The unadjusted rate of return on the in, Shields Company has gathered the following data on a proposed investment project: (Ignore income taxes.) a. You would need to invest S2,784 today ($5,000 0.5568). Peng Company is considering an investment expected to generate Management predicts this machine has a 10-year service life and a $105,000 salvage value, and it uses straight-line depreciation. Required information [The following information applies to the questions displayed below.) Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. The investment costs$45,000 and has an estimated $6,000 salvage value. The estimated cash inflow from the project are as follows: Year Cash Inflow Present value factor at 10% 1 70,000 0.909 2 80,000 0.826 3 120,000 0.751 4 90,000 0.683 5 60,000 0.621 Ca, A company is considering investment in a Flexible Manufacturing System. EV of $1. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. a. Thomas Company can acquire an $850,000 lathe that will benefit the firm over the next 7 years. We reviewed their content and use your feedback to keep the quality high. Req, A company is contemplating investing in a new piece of manufacturing machinery. The company's required r, Strauss Corporation is making an $85,900 investment in equipment with a 5-year life. The investment costs $45,300 and has an estimated $7,500 salvage value. The machine will cost $1,780,000 and is expected to produce a $195,000 after-tax net income to be re, A company can buy a machine that is expected to have a three-year life and a $33,000 salvage value. The machine will cost $1,796,000 and is expected to produce a $199,000 after-tax net income to be received at the end of each year. Createyouraccount. True, Richol Corp. is considering an investment in new equipment costing $180,000. The cost of the investment is. The expected average rate of return, giving effect to depreciation on investment is 15%. View some examples on NPV. Assume Peng requires a 10% return on its investments. Jimmy Co. seeks to earn an average rate of return of 18% on all capital projects. , e following two costs of production, respectively: (1) the paper; and (2) the authors' one-time fees. a. Compute Loon s taxable inco. Assume Peng requires a 15% return on its investments. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Average invested assets are $500,000, and Avocado Company has an 8% cost of capital. 45,000+6000=51,000. The salvage value of the asset is expected to be $0. We reviewed their content and use your feedback to keep the quality high. $40,000 Economic life 5 years Salvage value Zero Tax rate payable (assume paid in year of income) 30, A machine costs $500,000, has a $28,700 salvage value, is expected to last eight years, and will generate an after-tax income of $72,000 per year after straight-line depreciation. [22] also highlight the importance of power companies improving investment portfolio planning for various energy production resources to ensure expected production value and reduce risk. A bond that has a $1,000 par value (face value) and a con, Strauss Corporation is making a $70,000 investment in equipment with a 5-year life. 0.9, Merrill Corp. has the following information available about a potential capital investment: Initial investment $1,800 000 Annual net income $200,000 Expected life 8 years Salvage value $240,000 Merrill's cost of capital 10% Assume the straight-line deprec, Drake Corporation is reviewing an investment proposal. The company's required rate of return is 12 percent. using C++ What is the accountin, A company buys a machine for $62,000 that has an expected life of 7 years and no salvage value. The machine will cost $1,764,000 and is expected to produce a $191,000 after-tax net income to be received at the end of each year. Compute the accounting rate of return for this investment assume the company uses straight-line depreciation BOOK Accounting Rate of Return Choose Denominator: Choose Numerator = = Accounting Rate of Return Accounting rate of retum Print teferences. b) Ignores estimated salvage value. Which option should the company choose to invest in? Strauss Corporation is making an $89,000 investment in equipment with a 5-year life. Our experts can answer your tough homework and study questions. Required information (The following information applies to the questions displayed below.) All rights reserved. The investment costs $45,600 and has an estimated $8,700 salvage value. PV factor Estimate Longlife's cost of retained earnings. distributed with a mean of 78 when mixing oil and water is the change in entropy positive or Assume the company uses straight-line . NPV can be calculated using a financial calculator: Cash flow each year in year 1 and 2 = $2,600, Cash flow in year 3 = $2,600 + $7,200 = $9,800. The cost of the asset is $120,000, Babirusa Company is considering the following investment: Assume straight-line depreciation is used. 17 US public . The investment costs $45,000 and has an estimated $6,000 salvage value. 94% of StudySmarter users get better grades. Compu, Pong Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. (PV of $1. The Controller asks you to use a depreciation method that would produce the highest charge against income after three years. The company anticipates a yearly net income of $3,700 after taxes of 20%, with the cash flows to be received evenly throughout each year. , ided by total investment.. total investment is current assets (inventories, accounts receivables and cash) plus fixed assets. Amount Assume Peng requires a 5% return on its investments. The company has projected the following annual for the investment. The company requires an 8% return on its investments. Question: Peng Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. Yearly cash inflows = 3,300 + 16,200 = Our experts can answer your tough homework and study questions. Footnote 7 Although DS567 refers to paragraph (b)(iii) of article 73 of the TRIPS, considering its high coincidence with the text of article XXI of the GATT and the consistency of "judicial practice" of the panel in the specific trial process, Footnote 8 this chapter will categorize both sources as a security . Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. Required information [The following information applies to the questions displayed below.) a) Prepare the adjusting entries to report 1. The investment costs $56,100 and has an estimated $7,500 salvage value. Management estimates the machine will yield an after-tax net income of $12,500 each year. 2003-2023 Chegg Inc. All rights reserved. The investment costs $58, 500 and has an estimated $7, 500 salvage value. A machine costs $180,000, has a $12,000 salvage value, is expected to last eight years, and will generate an after-tax income of $39,000 per year after straight-line depreciation. The investment costs $45,000 and has an estimated $6,000 salvage value. 2. What is the accounti, A company buys a machine for $79,000 that has an expected life of 4 years and no salvage value. Capital investment: $15,000 Estimated useful life: 3 years Estimated salvage value: zero Estimated net cash inflow Year 1: $7,000 Year 2: You have the following information on a potential investment. Assume Peng requires a 10% return on its investments. the accounting rate of return for this investment; assume the company uses straight-line depreciation. Assume Peng requires a 5% return on its investments. The investment costs $49,000 and has an estimated $8,800 salvage value. Corresponding with the IRS in writing Assu, Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. The company uses a discount rate of 16% in its capital budgeting. check bags. What is the accounting rate of return? The management of Bischke Corporation is investigating an investment in equipment that would have a useful life of 8 years. What makes this potential investment risky? Compute this machine's accoun, If an asset costs $210,000 and is expected to have a $30,000 salvage value at the end of its ten-year life, and generates annual net cash inflows of $30,000 each year, the cash payback period is: A) 8 years B) 7 years C) 6 years D) 5 years, The anticipated purchase of a fixed asset for $400,000 with a useful life of 5 years and no residual value is expected to yield a total income of $150,000. If a table of present v, Grouper Company owns equipment that cost $1,044,000 and has accumulated depreciation of $440,800. The cost of capital is 6%. To help in this, compute the cost of capital for the firm for the following: a. A new operating system for an existing machine is expected to cost $, A machine costs $700,000 and is expected to yield an after-tax net income of $52,000 each year. Assume the company uses straight-line depreciation. b) 4.75%. It is considering investing in a project that costs $210,000 and is expected to generate cash inflows of $85,000 at the end of each year for 4 years. What is the return on investment? The building is expected to generate net cash inflows of $20,000 per year for the next 30 years. The initial cost and estimates of the book value of the investment at the end of each year, the net cash flows for each year, and, The Zinger Corporation is considering an investment that has the following data: Cash inflows occur evenly throughout the year. The company's required rate of return is 10% for this class of asset. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. TABLE B.4 f= [(1 + i)"-1Vi Future Value of an Annuity of 1 Rate Periods 1% 2% 3% 6% 7% 8% 9% 10% 12% 15% 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 0000 .0000 1.0000 10000 2.0100 2.0200 2.0300 2.0400 2.0500 2.0600 2.0700 2.0800 2.0900 2.1000 2.1200 3.0301 3.0604 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 4.0604 4.1216 4.1836 4.2465 4.3101 4.3746 4.4399 5.1010 5.2040 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6.1520 6.3081 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 7.2135 7.4343 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 8.2857 8.5830 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 9.3685 9.7546 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 1.0000 2.1500 3.4725 4.9934 6.7424 8.7537 11.0668 4.5061 4.5731 4.6410 4.7793 16.7858 10 10.4622 10.9497 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487 20.3037 11.5668 12.1687 12.8078 13.4864 14.2068 14.9716 15.7836 16.6455 7.5603 18.5312 20.6546 24.3493 12.6825 13.4121 14.1920 15.0258 15.9171 16.8699 17.8885 18.9771 20.1407 21.3843 24.1331 12 13 13.8093 14.6803 15.6178 16.6268 17.7130 18.8821 20.1406 21.4953 22.9534 24.5227 28.0291 14 14.9474 15.9739 17.0863 18.2919 19.5986 21.0151 22.5505 24.2149 26.0192 27.9750 32.3926 40.5047 15 16 17.2579 18.6393 20.1569 21.8245 23.6575 25.6725 27.8881 30.3243 33.0034 35.9497 42.7533 55.7175 17 18.4304 20.0121 21.7616 23.6975 25.8404 28.2129 30.8402 33.7502 36.9737 40.5447 48.8837 65.0751 18 19 20.8109 22.8406 25.1169 27.6712 30.5390 33.7600 37.3790 41.4463 46.0185 51.1591 63.4397 88.2118 20 22.0190 24.2974 26.8704 29.7781 33.0660 36.7856 40.9955 45.7620 51.1601 57.2750 72.0524 102.4436 25 30 35 41.6603 49.9945 60.4621 73.6522 90.3203 111.4348 138.2369 172.3168 215.7108 271.0244 431.6635 40 48.8864 60.4020 75.4013 95.0255 120.7998 154.7620 199.6351 259.0565 337.8824 442.5926 767.0914 1,779.0903 29.0017 34.3519 16.0969 7.2934 18.5989 20.0236 21.5786 23.2760 25.1290 27.1521 29.3609 31.7725 37.2797 47.5804 19.6147 21.4123 23.4144 25.6454 28.1324 30.9057 33.9990 37.4502 41.3013 45.5992 55.7497 75.8364 28.2432 32.0303 36.4593 41.6459 47.7271 54.8645 63.2490 73.1059 84.7009 98.3471 133.3339 212.7930 34.7849 40.5681 47.5754 56.0849 66.4388 79.0582 94.4608 113.2832 136.3075 164.4940 241.3327 434.7451 881.1702 Used to calculate the future value of a series of equal payments made at the end of each period. The estimated cash flow for the investment are as follows: N Description Cash flow ($) 0 price of the system Fo 1-4 revenue per, Joe Sixpack Inc. is considering an investment that will cost is $400,000. Required intormation Use the following information for the Quick Study below. (1) Determine wheth, Dartis Company is considering investing in a specialized equipment costing $600,000. The Galley purchased some 3-year MACRS property two years ago at The company uses straight-line depreciation. Get access to this video and our entire Q&A library, How to Calculate Net Present Value: Definition, Formula & Analysis. It is considering investing in a project which costs $350,000 and is expected to generate cash inflows of $140,000 at the end of each year for three years. The expected future net cash flows from the use of the asset are expected to be $580,000. Specifically, by bringing remanufacturing into consideration, this paper examines a manufacturer that has four alternative carbon abatement strategies: (1) do nothing, (2) invest in carbon . A. What are the investment's net present value and inte. Compute the net present value of this investment. The founder asked you for $220,000 today and you expect to get $1,070,000 in 9 years. Compute. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. Use the following table: | | Present Value o. Depreciation is calculated using the straight-line method. Select Chart Amount * PV Factor - Present Value Cash Flow Annual cash flow Residual value. The investment costs $47,400 and has an estimated $8,400 salvage value. Compute the net present value of this investment. What is the accountin, A company buys a machine for $77,000 that has an expected life of 6 years and no salvage value. The building is expected to generate net cash inflows of $15,000 per year for the next 30 years. The company is expected to add $9,000 per year to the net income. If an asset costs $70,000 and is expected to have a $10,000 salvage value at the end of its ten-year life and generates annual net cash inflows of $10,000 each year, the cash payback period is _____. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Compute the net present value of this investment. The company is considering an investment that would yield a cash flow of $12,000 per year for five years.
