2003-2023 Chegg Inc. All rights reserved. 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 $2,000 for three years. A machine costs $190,000, has a $10,000 salvage value, is expected to last nine years, and will generate an after-tax income of $30,000 per year after 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. What makes this potential investment risky? 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 project would require a $28,000 initial investment and has a salvage value of $2,000, A company has a minimum required rate of return of 9%. View some examples on NPV. Createyouraccount. The purpose of this study is to empirically examine the influence of firm characteristics (size, age, industry type, and ownership) on a firm's strategic orientation. The company's required rate of return is 10% for this class of asset. The investment costs $45,000 and has an estimated $10,800 salvage value. True, Richol Corp. is considering an investment in new equipment costing $180,000. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. 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. The company's required r, Strauss Corporation is making an $85,900 investment in equipment with a 5-year life. At the beginning of 2007, the company has a deferred tax asset of $360 pertain, Your company has been presented with an opportunity to invest in a project that is summarized as follows: Investment required $60,000,000 Annual gross income $14,000,000 Annual operating Costs 5,500,000 Salvage Value after 10 years 0 The project is expec, 1. using C++ What is the accounti, The Truncale Company is planning a $210,000 equipment investment that has an estimated five-year life with no estimated salvage value. Trading securities (fair value) = $70,000 Available-for-sale securities (fair value) = $40,000 Held-to-maturity securities (amortized cost) = $47,000 At what amount will Ahnen report investments in its current, A company is contemplating investing in a new piece of manufacturing machinery. Project 2 requires an initial investment of $4,000,000 and has a present value of cash flows of $6,000,000. Peng Company is considering an investment expected to generate an average net income after taxes of $3,200 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of. should purchase a used Caterpillar mini excavator, A) The distribution of exam scores for Statistics is normally Calculate its book value at the end of year 10. Assume Peng requires a 5% return on its investments. Required information (The following information applies to the questions displayed below.] negative? The following information applies to the questions displayed below.J Peng Company is considering an investment expected to generate an average net income after taxes of $2,800 for three years. The investment costs $51,900 and has an estimated $10,800 salvage value. Peng Company is considering an Investment expected to generate an average net income after taxes of $3,000 for three years. Calculate its book value at the end of year 6. Tradin, Drake Corporation is reviewing an investment proposal. 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. 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. Compute the net present value of this investment. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. It is mainly used to evaluate a prospective project whether it would be profitable to the investor or not. Assume the company uses straight-line depreciation. The equipment has a five-year life and an estimated salvage value of $50,000. Compute the net present value of this investment. 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 . The lease term is five years. The investment costs $45,600 and has an estimated $8,700 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. The annual depreciation cost is 10% of fixed capital investment. The salvage value of the asset is expected to be $0. 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. It expects the free cash flow to grow at a constant rate of 5% thereafter. The salvage value of the asset is expected to be $0. The investment costs $54,000 and has an estimated $7,200 salvage value. Compu, Lanyard Company is considering an investment that will generate $600,000 in cash inflows per year for 7-years and has $240,000 of cash outflows for the same period (before income taxes). Assume Pang requires a 5% return on its investments. A machine that costs $770,000 has an estimated residual value of $70,000 and an estimated useful life of 7 years. The fair value of the equipment is $476,000. A. Financial projections for the investment are tabulated here. Assume the company uses straight-line . The company uses the straight-line method of depreciation and has a tax rate of 40 percent. The investment costs $45,000 and has an estimated $6,000 salvage value. Yearly net cash inflows (before taxes) from the machine are estimated at $140,000. Compute the net present value of this investment. Peng Company is considering an investment expected to generate Determine the payout period in year. Present value Assume Peng requires a 15% return on its investments. Req, A company is contemplating investing in a new piece of manufacturing machinery. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Required information [The following information applies to the questions displayed below.) Solution: Annual depreciation = (Cost - Salvage value) / useful life = ($45,600 - $8,700) / 3 = $12,300 Annual cash i. The current value of the building is estimated to be $300,000. The company uses straight-line depreciation. Anglemenesis Company is planning to spend $84,000 for a new machine that is to be depreciated on a straight-line basis over 10 years with no salvage value. a. The corporate tax rate is 35 percent. Become a Study.com member to unlock this answer! It generates annual net cash inflows of $10,000 each year. a. 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 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 net income for each year are presented in the schedule below. Enter the email address you signed up with and we'll email you a reset link. The 2. 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). 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? Management estimates that this machine will generate annual after-tax net income of $540. A machine costs $210,000, has a $16,000 salvage value, is expected to last nine years, and will generate an after-tax income of $47,000 per year after straight-line depreciation. Compute the payback period. ABC Company is adding a new product line that will require an investment of $1,500,000. Assume Peng requires a 15% return on its investments. The investment costs $45,000 and has an estimated $6,000 salvage value. The company has an all-equity capital structure, and its cost of equity capital is 15 percent. Compute the accounting sane of return for this investment assume the company uses straight-line depreciation. The cost of the asset is $700,000 and it will be depreciated using s, The MoMi Corporation's income before interest, depreciation and taxes, was $1.7 million in the year just ended, and it expects that this will grow by 5% per year forever. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Assume Peng requires a 10% return on its investments. 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. First we determine the depreciation expense per year. 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. Thomas Company can acquire an $850,000 lathe that will benefit the firm over the next 7 years. Required: Prepare the, X Company is thinking about adding a new product line. Management predicts this machine has a 10-year service life and a $105,000 salvage value, and it uses straight-line depreciation. The company anticipates a yearly net income of $2,950 after taxes of 34%, with the cash flows to be received evenly throughout each year. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Assume the company requires a 12% rate of return on its investments. 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. 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). 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. Our experts can answer your tough homework and study questions. 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. Com, Peng Company is considering an investment expected to generate an average net income after taxes of $2,200 for three years. All, Maude Company's required rate of return on capital budgeting projects is 9%. d) Provides an, Dango Corporation is reviewing an investment proposal. O, Reece Manufacturing Company is considering the following investment proposal: The firm uses the straight-line method of depreciation with no mid-year convention. Required information [The folu.ving information applies to the questions displayed below.) The investment costs $45,000 and has an estimated $6,000 salvage value. check bags. Stop procrastinating with our smart planner features. Negative amounts should be indicated by a minus sign.) The investment costs $54,000 and has an estimated $7,200 salvage value. The investment costs$45,000 and has an estimated $6,000 salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of $2,000 for three years. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The investment costs $45,600 and has an estimated $6,600 salvage value. Assume the company uses straight-line depreciation (PV of $1. The fair value. (Round answer to 2 decimal places. The management predicts that this machine has a 10-year services life and a $100,000 salvage value, and, The Placque Company purchased an office building for $4,555,000. The amount to be invested is $100,000. 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. The investment costs $57.600 and has an estimated $8,400 salvage value. The company is expected to add $9,000 per year to the net income. Assume the company uses straight-line depreciation. Assume Peng requires a 5% return on its investments. Note: NPV is always a sensitive problem bec. EV of $1. The company is expected to add $9,000 per year to the net income. The company has projected the following annual cash flows f, Lt. Dan Corporation invested $80,000 in a manufacturing equipment. (For calc, Natt Company is considering undertaking a project that would yield annual profits (after depreciation) of $68,000 for 5 years. The equipment will be depreciated on a straight-line basis over a five-year life and is expected to generate net cash inflows of $120,000 the first year, $140,000 the second, Assume the company requires a 10% rate of return on its investments. The system requires a cash payment of $125,374.60 today. Comp, Pang Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. The company uses straight-line depreciation. Assume the company requires a 12% rate of return on its investments. What is the accounti, A company buys a machine for $70,000 that has an expected life of 6 years and no salvage value. b) 4.75%. Determine the net present value, and ind. What is the most that the company would be willing to invest in this project? A company invests $175,000 in plant assets with an estimated 25-year service life and no salvage value. Determine. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. 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.] The expected future net cash flows from the use of the asset are expected to be $595,000. The building is expected to generate net cash inflows of $15,000 per year for the next 30 years. = 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.) 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 investment costs $47,400 and has an estimated $8,400 salvage value. Required information Use the following information for the Quick Study below. Sign up for free to discover our expert answers. The company currently has no debt, and its cost of equity is 15 percent. Input the cash flow values by pressing the CF button. The investment costs $48,600 and has an estimated $6,300 salvage value. The investment costs $45,000 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. Each investment costs $480. The founder asked you for $220,000 today and you expect to get $1,070,000 in 9 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 payback period for this investment Is: a) 3 years b) 3.8 years c) 4, A company is contemplating investing in a new piece of manufacturing machinery. copyright 2003-2023 Homework.Study.com. Compute the accounting rate of return for this investment; assume the company uses 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. All rights reserved. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. What amount should Elmdale Company pay for this investment to earn a 8% return? Furthermore, the implication of strategic orientation for . Fair value method c. Historical cost m, Blue Fin Inc. requires all capital investments to generate a minimum internal rate of return of 15%. FV of $1. Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. Experts are tested by Chegg as specialists in their subject area. What is the investment's payback period? earnings equal sales minus the cost of sales Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. The IRR on the project is 12%. Compute the net present value of this investment. The warehouse will cost $370,000 to build. The investment costs $54,900 and has an estimated $8,100 salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. The profitability index for this project is: a. 15900 The company requires a 10% rate of return on its investments. Question. ), The net present value of the investment is -$6,921. The machine will cost $1,804,000 and is expected to produce a $201,000 after-tax net income to be re, A company can buy a machine that is expected to have a three-year life and $30,000 salvage value. B. the accounting rate of return for this investment; assume the company uses straight-line depreciation. Compute the net present value of this investment. After inputting the value, press enter and the arrow facing a downward direction. 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 $3,500 for three years. c) 6.65%. The security exceptions clause in the WTO legal framework has several sources. For (n= 10, i= 9%), the PV factor is 6.4177. Assume that the company can invest m, For the year 2015, Ronis Corporation earned a profit of $360,000 on total sales revenue of $2,000,000. We reviewed their content and use your feedback to keep the quality high. Option 1 generates $25,000 of cash inflow per year and has zero residual value. Management predicts this machine has a 12-year service life and a $40,000 salvage value, and it uses straight-line depreciation. 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. b. The investment costs $45,000 and has an estimated $6,000 salvage value. What is Ronis' Return on Investment for 2015? Let us assume straight line method of depreciation. 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. What are the appropriate labels for classifying the relationship between this cost item and th Multiple Choice, returns on investment is computed in the following manner. Peng Company is considering an investment expected to generate an average net income after taxes of $2,200 for three years. Assume Peng requires a 10% return on its investments. investment costs $51,600 and has an estimated $10,800 salvage Compute this machine's accounti, A machine costs $500,000 and is expected to yield an after-tax net income of $19,000 each year. Negative amounts should be indicated by #12 Project 1 requires an initial investment of $400,000 and has a present value of cash flows of $1,100,000. gifts. Assume Peng requires a 5% return on its investments. ), Summary of Strategic Management southern African concepts and case fourth edition, chapters 1 to 4, What of the following is not considered practice before the IRS per Circular 230? The asset is recorded at $810,000 and has an economic life of eight years. (Do not round intermediate calculations.). The present value of an annuity due for five years is 6.109. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. PVA of $1. 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 . Question: 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 10% return on its investments. Assume Peng requires a 5% return on its investments. (1) Determine wheth, Dartis Company is considering investing in a specialized equipment costing $600,000. Assume Peng requires a 15% return on its investments. ), Exercise 26-11 BAP Corporation is reviewing an investment proposal. You would need to invest S2,784 today ($5,000 0.5568). Avocado Company has an operating income of $100,000 on revenues of $1,000,000. The company pays an operating tax rate of 30%. What are the investment's net present value and inte. Assume Peng requires a 10% return on its investments. The investment has zero salvage value. Presented below is 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, an, Ahnen Company owns the following investments. Compute the net present value of each potential investment. See Answer. Experts are tested by Chegg as specialists in their subject area. 7 years c. 6 years d. 5 years, The amount of the estimated average income for a proposed investment of $90,000 in a fixed asset, giving effect to depreciation (straight-line method), with a useful life of 4 years, no residual value. 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. Negative amounts should be indicated by a minus sign.) Amount To help in this, compute the cost of capital for the firm for the following: a. Required information (The following information applies to the questions displayed below.) (PV of $1. Management estimates that this machine will generate annual after-tax net income of $540. 2003-2023 Chegg Inc. All rights reserved. You have the following information on a potential investment. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. (Round each present value calculation to the nearest dollar. If a potential investments internal rate of return is above the companys hurdle rate, should the investment be made? 8 years b. The investment costs $56,100 and has an estimated $7,500 salvage value. d) 9.50%. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. distributed with a mean of 78 when mixing oil and water is the change in entropy positive or 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. Assume Peng requires a 5% return on its investments. 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. If a table of present v, A company can buy a machine that is expected to have a three-year life and a $29,000 salvage value. 1,950/25,500=7.65. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Reverse innovations are defined as "clean slate, super value products that are technologically advanced created to meet the unique needs of relevant segments, initially adopted in the emerging markets followed by the developed countries" (Malodia et al., 2020, p. 1010).The adjective "reverse" means the flow of innovation is from developing to developed economies. a) 2.85%. 8 years b. 1. The cost of capital is 6%. 2003-2023 Chegg Inc. All rights reserved. Required intormation Use the following information for the Quick Study below. What is the accounting rate of return? The management of Samsung is planning to invest in a new companywide computerized inventory tracking system. The machine is expected to last four years and have a salvage value of $50,000. Flower Company is considering an investment which will return a lump sum of $2,500,000 six years from now. If the accounting rate of return is 12%, what was the purchase price of the mac.
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