2.72. Choose Numerator: Accounting Rate of Return Choose Denominator: = Accounting Rate of Return = Accounting rate of return, Required information [The following information applies to the questions displayed below.) value. A company's required rate of return on capital budgeting is 15%. Using the factors of n = 12 and i= 5% (12 semiannual periods and a semiannual rate of 5%), the factor is 0.5568. The annual depreciation cost is 10% of fixed capital investment. 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. 45,000+6000=51,000. The The payback period f. Elmdale Company is considering an investment that will return a lump sum of $743,100, 7 years from now. The salvage value of the asset is expected to be $0. The profitability index for this project is: a. Corresponding with the IRS in writing We reviewed their content and use your feedback to keep the quality high. Accounting Rate of Return Choose Denominator: Choose Numerator: 7 = Accounting Rate of Return = Accounting rate of return, Required information [The following information applies to the questions displayed below.] Securities Cost Fair Value Trading 120,000 124,000 Non-trading 100,000 94,000 The non-trading securities are held as long-term investments. Determine the net present value, and ind. Investment required $60,000,000, Salvage value after 10 years $0, Gross income $2, A company forecasts free cash flow of $40 million in three years. Average invested assets are $500,000, and Avocado Company has an 8% cost of capital. Assume Peng requires a 15% return on its investments. Compute the net present value of this investment. Project 1 requires an initial investment of $400,000 and has a present value of cash flows of $1,100,000. (PV of. The company uses straight-line depreciation. investment costs $51,600 and has an estimated $10,800 salvage a. Required information [The following information applies to the questions displayed below.) Assume Peng requires a 10% return on its investments. Good estimates are available for the initial investment and the a, Pito Company has been in operation for several years. d) Provides an, Dango Corporation is reviewing an investment proposal. The cost of capital is 6%. Assume Peng requires a 5% return on its investments. Jimmy Co. seeks to earn an average rate of return of 18% on all capital projects. Management predicts this machine has a 9-year service life and a $140,000 salvage value, and it uses str, A machine costs $500,000 and is expected to yield an after-tax net income of $19,000 each year. TABLE B.3 Present Value of an Annuity of 1 Rat Periods 1% 2% 4% 5% 6% 7% 5% 10% 12% 15% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 1.9704 1.9416 1.9135 1.88611.8594 1.8334 8080 1.7833 1.759 .7355 16901 1.6257 2.9410 2.8839 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 2.2832 3.9020 3.8077 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 2.8550 3.9927 3.8897 3.7908 3.6048 3.3522 5.7955 5.6014 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 3.7845 5.3893 5.2064 5.0330 4.8684 4.5638 4.1604 7.6517 7.3255 7.0197 6.73276.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 4.4873 8.5660 8.1622 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7590 5.3282 4.7716 9.4713 8.9826 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502 5.0188 7.1390 6.8052 6.4951 5.93775.2337 11.255 10.5753 9.95409.3851 8.8633 8.3838 7.9427 7.5361 7.1607 6.8137 6.1944 5.4206 12.1337 11.3484 10.6350 9.9856 9.3936 8.8527 8.3577 7.9038 7.4869 7.1034 6.4235 5.5831 13.0037 12.1062 11.2961 10.5631 9.8986 9.2950 8.7455 8.2442 7.7862 7.3667 6.6282 5.7245 13.8651 .8493 11.9379 11.1184 10.3797 9.7122 9.1079 8.5595 8.0607 7.6061 6.8109 5.8474 14.7179 13.5777 12.5611 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 6.9740 5.9542 15.5623 14.2919 13.1661 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.1196 6.0472 16.3983 14.9920 13.7535 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.2497 6.1280 17.2260 15.6785 14.3238 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 7.3658 6.1982 18.0456 16.3514 14.8775 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.4694 6.2593 22.0232 19.5235 17.4131 15.6221 14.0939 12.7834 11.6536 10.6748 9.8226 9.0770 7.8431 6.4641 25.8077 22.3965 19.6004 17.2920 5.3725 13.7648 12.4090 11.2578 10.2737 9.4269 8.0552 6.5660 29.4086 24.9986 21.4872 18.6646 16.3742 14.4982 12.9477 11.6546 10.5668 9.6442 8.1755 6.6166 32.8347 27.3555 23.1148 19.7928 17.1591 15.0463 13.3317 11.9246 10.7574 9.7791 8.2438 6.6418 4.8534 4.7135 4.57974.4518 4.3295 4.2124 4.1002 6.7282 6.4720 6.2303 6.0021 5.7864 5.5824 10.3676 9.7868 26 8.7605 8.3064 7.8869 7.4987 12 13 14 15 16 19 20 25 30 35 40 Used to calculate the present value of a series of equal payments made at the end of each period. EV of $1. The expected net cash inflows from, A building has a cost of $750,000 and accumulated depreciation of $125,000. ABC Company is adding a new product line that will require an investment of $1,500,000. The fair value. Transcribed image text: Peng Company is considering an investment expected to generate an average net income after taxes of $2, 400 for three years. The investment costs $45,000 and has an estimated $6,000 salvage value. Assume that net income is received evenly throughout each year and straight-line depreciation is used. A company has three independent investment opportunities. information systems, employees, maintenance, and other costs (inputs). The amount to be invested is $210,000. 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. What makes this potential investment risky? All rights reserved. Using the original cost of the asset, the unadjusted rate of return on, A machine costs $600,000 and is expected to yield an after-tax net income of $23,000 each year. Depreciation is calculated using the straight-line method. 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 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. To make this happen, the firm, Wilcox Company is considering an investment that will generate cash revenues of $120,000 per year for 8 years, and have cash expenses of $60,000 per year for 8 years. (Round answer to, During the year, Loon Corporation has the following transactions: $400,000 operating income; $325,000 operating expenses; $25,000 municipal bond interest; $60,000 long-term capital gain; and $95,000 short-term capital loss. The salvage value of the asset is expected to be $0. Createyouraccount. b) define symbols and develop mathematical model, how does a change in each variable affect demand. 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. The present value of an annuity due for five years is 6.109. Negative amounts should be indicated by a minus sign.) Peng Company is considering an investment expected to generate an average net income after taxes of $2, 400 for three years. The system requires a cash payment of $125,374.60 today. Management predicts this machine has a 12-year service life and a $40,000 salvage value, and it uses straight-line depreciation. What are the investment's net present value and inte. Assume the company uses straight-line depreciation. Management predicts this machine has an 8-year service life and a $40,000 salvage value, and it uses straight-line depreciation. Assume the company uses straight-line depreciation. Compute the net present value of this investment. The investment costs $59,400 and has an estimated $7,200 salvage value. Amount The initial cost and estimates of the book value of the investment at the end of the year, the net cash flows for each year, and the net income, Crane Company is considering an investment that will return a lump sum of $898, 900, 6 years from now. The firm is in, A large, profitable corporation with net income exceed $20 million is considering the installation of a new machine that cost $100,000 with the expected salvage value of $20,000 after 4 years of usefu, A company buys a machine for $69,000 that has an expected life of 7 years and no salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. $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. a) 2.85%. The company is currently considering an investment that is expected to generate annual cash inflows of $10,000 for 6 years. What amount should Elmdale Company pay for this investment to earn a 8% return? The amount, to be invested, is $100,000. Compute this machine s accoun, A machine costs $700,000 and is expected to yield an after-tax net income of $52,000 each year. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. Management predicts this machine has a 9-year service life and a $80,000 salvage value, and it uses strai, A machine costs $200,000 and is expected to yield an after-tax net income of $5,000 each year. Sign up for free to discover our expert answers. The investment costs $48,600 and has an estimated $6,300 salvage value. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. It expects the free cash flow to grow at a constant rate of 5% thereafter. The net cash flows are estimated to be $7,610 per year for the next 5 years and no salvage value is anticipated. The following estimates are available: Initial cost = $279,800 Cost of capital = 12% Estima, Strauss Corporation is making an $87,150 investment in equipment with a 5-year life. projected GROSS cash flows from the investment are $150,000 per year. For example: What is the future value of $4,000 per ye ar for 6 years assuming an annual interest rate of 8%. PVA of $1. 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. The investment costs $47,400 and has an estimated $8,400 salvage value. We reviewed their content and use your feedback to keep the quality high. What amount should Crane Company pay for this investment to earn an 9% return? The machine will generate annual cash flows of $21,000 for the next three years. What is the return on investment? Compute this machine's accoun, A machine costs $300,000 and is expected to yield an after-tax net income of $9,000 each year. You w, A machine that cost $720,000 has an estimated residual value of $60,000 and an estimated useful life of eleven years. The machine will cost $1,772,000 and is expected to produce a $193,000 after-tax net income to be re, A company can buy a machine that is expected to have a three-year life and a $36,000 salvage value. Talking on the telephon Determine. c. Retained earnings. Peng Company is considering an investment expected to generate Yokam Company is considering two alternative projects. The fair value of the equipment is $464,000. Management predicts this machine has a 10-year service life and a $120,000 salvage value, and it uses straight-line depreciation. Assume Peng requires a 10% return on its investments, compute the net present value of this investment. The investment costs $59,500 and has an estimated $9,300 salvage value. For l6, = 8%), the FV factor is 7.3359. 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 . 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.) Compute the payback period. The net income after the tax and depreciation is expected to be P23M per year. 2.3 Reverse innovation. The NPV is computed as: {eq}\displaystyle \text{Present value of annuity (PVA) } = P * \frac{1 - (1 + r)^{-t}}{r} {/eq}, Become a Study.com member to unlock this answer! The investment costs $45,000 and has an estimated $10,800 salvage value. B. Coins can be redeemed for fabulous Peng Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. Assume Peng requires a 15% return on its investments. View some examples on NPV. (Round answer to 2 decimal places. Select chart The machine will cost $1,824,000 and is expected to produce a $206,000 after-tax net income to be re. The investment costs $45,000 and has an estimated $6,000 salvage value. Assume Pang requires a 5% return on its investments. What amount should Elmdale Company pay for this investment to earn a 12% return? It expects to generate $2 million in net earnings after taxes in the coming year. Compute the accounting rate of return for, The following data concerns a proposed equipment purchase: Cost - $159,200 Salvage value - $4,800 Estimated useful life - 4 years Annual net cash flows - $46,900 Depreciation method - Straight-line The annual average investment amount used to calcul. Justice has long been an important aspect in managing and ensuring long-term successful buyer-supplier relationships because it is capable of explaining and predicting a wide range of relevant behaviours, attitudes and outcomes in such relationships (Alghababsheh et al., 2022; Griffith et al., 2006).It encompasses three dimensions in the buyer-supplier relationship, namely distributive . (1) Determine whet, Lt. Dan Corporation invested $80,000 in a manufacturing equipment. Comp, Pang Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. Avocado Company has an operating income of $100,000 on revenues of $1,000,000. Yea, A company projects an increase in net income of $40,000 each year for the next five years if it invests $500,000 in new equipment. Required information [The following information applies to the questions displayed below.] Select Chart Amount x PV Factor = Present Value Cash Flow Annual cash flow Residual value Net present value, Required information [The folu.ving information applies to the questions displayed below.)
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