1,950/25,500=7.65. A company buys a machine for $76,000 that has an expected life of 6 years and no salvage value. S4 000 per year for 6 years accumulates to $29,343.60 ($4,000 7.3359). What is the cash payback period? The investment costs $45,600 and has an estimated $8,700 salvage value. The Longlife Insurance Company has a beta of 0.8. Compute the payback period. 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. The net present value (NPV) is a capital budgeting tool. Required information (The following information applies to the questions displayed below.) The system is expected to generate net cash flows of $13,000 per year for the next 35 years. Free and expert-verified textbook solutions. Flower Company is considering an investment which will return a lump sum of $2,500,000 six years from now. Assu, Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Capital investment - $15,000 Estimated useful life - 3 years Estimated salvage value - zero Estimated net cash inflow: -Year 1 - $7,00, Compute the net present value of each potential investment. The company uses a discount rate of 16% in its capital budgeting. Accounting 202 Final - Formulas and Examples. using C++ (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Assume Peng requires a 5% return on its investments. Management estimates the machine will yield an after-tax net income of $12,500 each year. The investment costs $48,600 and has an estimated $6,300 salvage value. Park Co. is considering an investment that requires immediate payment of $27,000 and provides expected cash inflows of $9,000 annually for four years. The amount to be invested is $210,000. Compute the net present value of this investment. Compute the net present value of this investment. The building is expected to generate net cash inflows of $15,000 per year for the next 30 years. The fair value. Peng Company is considering an investment expected to generate an average net income after taxes of $2,000 for three years. Let us assume straight line method of depreciation. Avocado Company has an operating income of $100,000 on revenues of $1,000,000. The investment costs $45,000 and has an estimated $6,000 salvage value. 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.] Using a sample of Chinese-listed firms with key soil pollution regulation from 2013 to 2020, this study utilized the Difference-in-Differences method . 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. The investment costs $52,200 and has an estimated $9,000 salvage value. What rate of return should you expect for your investment in Fir, If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment, which method would the investor normally use to account for this investment? The investment costs $45,000 and has an estimated $6,000 salvage value. investment costs $48,900 and has an estimated $12,000 salvage 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 company anticipates a yearly net income of $3,700 after taxes of 20%, with the cash flows to be received evenly throughout each year. The expected future net cash flows from the use of the asset are expected to be $595,000. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $3,400 for three years. The amount to be invested is $100,000. (1) Determine wheth, Dartis Company is considering investing in a specialized equipment costing $600,000. EV of $1. The profitability index for this project is: a. The investment costs $45,000 and has an estimated $6,000 salvage value. a. What is the depreciation expense for year two using the straight-line method? Estimate Longlife's cost of retained earnings. The investment costs $45,000 and has an estimated $6.000 salvage value. It is mainly used to evaluate a prospective project whether it would be profitable to the investor or not. A machine costs $700,000 and is expected to yield an after-tax net income of $52,000 each year. Experts are tested by Chegg as specialists in their subject area. The present value of an annuity due for five years is 6.109. What is the NPV of the investment, The Zinger Corporation is considering an investment that has the following data: Year 1 Year 2 Year 3 Year 4 Year 5 Investment $8,000 $3,000 Cash inflow $2,000 $2,000 $5,000 $4,000 $4,000 Cash inflows occur evenly throughout the year. Assume the company uses straight-line depreciation. it is expected that: Initial cost $2,780,000 Annual cash inflow $2,540,000 Annual cash outflows $2,260,000 Estimated useful life 10 years Salvage value $4,400,000 Discount rate 8% Calculate the net pr, Lt. Dan Corporation invested $80,000 in a manufacturing equipment. A company invests $175,000 in plant assets with an estimated 25-year service life and no salvage value. If the weighted average cost of capital is 10% and the cost of equity is 15%, what is the horizon value, to the ne, Management of a firm with a cost of capital of 12 percent is considering a $100,000 investment with annual cash flow of $44,524 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $2, 400 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. The company's required r, Strauss Corporation is making an $85,900 investment in equipment with a 5-year life. The cash inflow of each investment is as follows: Year Cash inflow A Cash inflow B Cash inflow C 1 $300 $500 $100 2 $300 $400 $2, Jimmy Co. is considering a 12-year project that is estimated to cost $1,050,000 and has no residual value. d) 9.50%. The company is considering an investment that would yield an after-tax cash flow of $30,000 in four years. Ignoring taxes, what is the most that the company would be willing to in, Strauss Corporation is making a $89,600 investment in equipment with a 5-year life.The company uses the straight-line method of depreciation and has a tax rate of 40 percent.The company's required rat, Strauss Corporation is making a $89,750 investment in equipment with a 5-year life.The company uses the straight-line method of depreciation and has a tax rate of 40 percent.The company's required rat, Strauss Corporation is making a $91,950 investment in equipment with a 5-year life. Assume the company uses straight-line . Note: NPV is always a sensitive problem bec. The investment costs $45,600 and has an estimated $8,700 salvage value. The warehouse will cost $370,000 to build. The corporate tax rate is 35 percent. 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. (before depreciation and tax) $90,000 Depreciation p.a. value. A company has three independent investment opportunities. Required information [The following information applies to the questions displayed below.) Assume Peng requires a 10% return on its investments. What is the accounti, A company buys a machine for $79,000 that has an expected life of 4 years and no salvage value. b) 4.75%. What is the present valu, Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. The product line is estimated to generate cash inflows of $300,000 the first year, $250,000 the second year, and $200,000 each year thereafter for ten more years. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. Using the original cost of the asset, what will be the unadjusted rat, A company can buy a machine that is expected to have a three-year life and a $31,000 salvage value. Corresponding with the IRS in writing The company is expected to add $9,000 per year to the net income. Goodwill. Calculate its book value at the end of year 10. Assume Peng requires a 5% return on its investments. Fair value method c. Historical cost m, Blue Fin Inc. requires all capital investments to generate a minimum internal rate of return of 15%. 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. Option 1 generates $25,000 of cash inflow per year and has zero residual value. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. A novel dynamic modeling method for a multi-product production line is developed to investigate dynamic properties of the system under random disruptions such as machine failures and market demand . The investment costs $54,000 and has an estimated $7,200 salvage value. The machine will generate annual cash flows of $21,000 for the next three years. X Assume the company requires a 12% rate of return on its investments. Compute the net present value of this investment. What is the payback period in years ap, The Montana Company has decided to invest in a project that is expected to produce the following cash flows: $12,500 (year 1), $14,000 (year 2) and $9,000 (year 3). 2003-2023 Chegg Inc. All rights reserved. Solution: Annual depreciation = (Cost - Salvage value) / useful life = ($45,600 - $8,700) / 3 = $12,300 Annual cash i. Management predicts this machine has a 10-year service life and a $120,000 salvage value, and it uses straight-line depreciation. Compute the net present value of this investment. You w, A machine that cost $720,000 has an estimated residual value of $60,000 and an estimated useful life of eleven years. a) construct an influence diagram that relates these variables Select Chart Amount * PV Factor - Present Value Cash Flow Annual cash flow Residual value. Peng Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. The initial outlay of the project would be $800,000 and the project's assets would have a residual value of $50,000 at the end o. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. the accounting rate of return for this investment; assume the company uses straight-line depreciation. The investment costs $56,100 and has an estimated $7,500 salvage value. 2003-2023 Chegg Inc. All rights reserved. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Assume Peng requires a 5% return on its investments. Ignore income taxes. The asset has no salvage value. Assume Peng requires a 10% return on its investments. PVA of $1. The company has projected the following annual cash flows for the investment. the net present value of this investment. 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 is considering an investment that would yield a cash flow of $12,000 per year for five years. The current value of the building is estimated to be $120,000. QS 11-8 Net present value LO P3Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Assume the company uses straight-line depreciation. value. It is expected that the rate of utilization of inputs should not exceed the corresponding outputs being produced if the efficiency of the system concerned is to be maximized. 45,000+6000=51,000. a. What is the average amount invested in a machine during its predicted five-year life if it costs $200,000 and has a $20,000 salvage value? (PV of. (FV of |1, PV of $1, FVA of $1 and PVA of $1). Compu, A company constructed its factory with a fixed capital investment of P120M. Required intormation Use the following information for the Quick Study below. Compute the net present value of this investment. It generates annual net cash inflows of $10,000 each year. Peng Company is considering an investment expected to generate an average net income after taxes of $2,000 for three years. They first apply the real options approach to assess the investment values as well as the distribution of energies such as biomass, coal, natural . Talking on the telephon It gives us the profitability and desirability to undertake the project at our required rate of return. You have the following information on a potential investment. The company's required rate of return is 12 percent. Assume Peng requires a 5% return on its investments. Experts are tested by Chegg as specialists in their subject area. Compute the payback period. Our experts can answer your tough homework and study questions. Compute the accounting rate of return for this. The cost of the investment is. Question. What is the return on investment? The investment costs $45,000 and has an estimated $6,000 salvage value. The following data concerns a proposed equipment purchase: Cost $136,400 Salvage value $3,600 Estimated useful life 4 years Annual net cash flows $45,700 Depreciation method Straight-line The annual average investment amount used to calculate the accounti, Landmark Company is considering an investment in new equipment costing $500,000. Createyouraccount. Assume Peng requires a 15% return on its investments. Assume Peng requires a 15% return on its investments. The asset is recorded at $810,000 and has an economic life of eight years. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. B. Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. The asset is expected to have a fair value of $270,000 at five years, and a fair value of $90,000 at the e, Horak Company accumulates the following data concerning a proposed capital investment: cash cost $219,620, net annual cash flow $34,932, present value factor of cash inflows for 10 years 6.71 (rounded). If the accounting ra, A company buys a machine for $76,000 that has an expected life of 7 years and no salvage value. Management predicts this machine has an 8-year service life and a $60,000 salvage value, and it uses straight-line depreciation. 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. 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. FV of $1. The investment costs $57,600 and has an estimated $6,000 salvage value. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. Q: Peng Company is considering an investment expected to generate an average net. QS 25-7 Computation of accounting rate of return LO P2 Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The company is currently considering an investment that is expected to generate annual cash inflows of $10,000 for 6 years. Assume the company uses straight-line . The company's required, Crispen Corporation can invest in a project that costs $400,000. The investment costs $58, 500 and has an estimated $7, 500 salvage value. 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. The investment costs $49,500 and has an estimated $10,800 salvage value. The investment costs $51,600 and has an estimated $10,800 salvage value. Compute the net present value of each potential investment. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. The net present value of the investment is $-1,341.55. 76,000 b. 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.) The investment costs $45,000 and has an estimated $6,000 salvage value. The company currently has no debt, and its cost of equity is 15 percent. a. Compute Loon s taxable inco. All rights reserved. An asset costs $70,000 and is expected to have a $10,000 salvage value at the end of its 10-year life. A negative NPV would suggest that the project is not worth investing since it will probably yield to a loss while a positive NPV would suggest otherwise. The system, A machine costs $700,000 and is expected to yield an after-tax net income of $30,000 each year. Sweden, Denmark and Norway, encounter several regulations and initiatives considering CSR and SRI such as the European Green Deal. For example: How much would you need to invest today at 10% compounded semiannually to accumulate $5,000 in 6 years from today? Peng Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. turnover is sales div Melton Company's required rate of return on capital budgeting projects is 16%. A machine costs $210,000, has a $14,000 salvage value, is expected to last ten years, and will generate an after-tax income of $43,000 per year after straight-line depreciation. Everything you need for your studies in one place. This site is using cookies under cookie policy . Peng Company is considering an investment expected to generate an average net income after taxes Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. A machine that costs $770,000 has an estimated residual value of $70,000 and an estimated useful life of 7 years. Answer is complete but user contributions licensed under cc by-sa 4.0, Peng Company is considering an investment expected to generate an average net income after taxes of $2,500 for three years. What amount should Crane Company pay for this investment to earn an 9% return? The company is considering an investment that would yield a cash flow of $20,000 in 5 years. The company s required rate of return is 13 percent. Compute the net present value of this investment. Assume Peng requires a 10% return on its investments. , e following two costs of production, respectively: (1) the paper; and (2) the authors' one-time fees. investment costs $51,600 and has an estimated $10,800 salvage Negative amounts should be indicated by a minus sign.) Assume Peng requires a 5% return on its investments. 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. The company's required rate of return is 10% for this class of asset. 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 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 net income, Drake Corporation is reviewing an investment proposal. Peng Company is considering an investment expected to generate an average net income after taxes of $2,000 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. 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.
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