What amount should Elmdale Company pay for this investment to earn a 12% return? For l6, = 8%), the FV factor is 7.3359. The company's required rate of return is 11 percent. Assume Peng requires a 5% return on its investments. The company requires a 10% rate of 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%. What are the investment's net present value and inte. This site is using cookies under cookie policy . Peng Company is considering an investment expected to generate an average net income after taxes of $2,700 for three years. 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 present value of the future cash flows at the company's desired rate of return is $100,000. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. The investment costs $45,000 and has an estimated $6,000 salvage value. The investment costs $51,600 and has an estimated $10,800 salvage value. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. 51,000/2=25,500. The company has projected the following annual cash flows f, Lt. Dan Corporation invested $80,000 in a manufacturing equipment. Present value of an annuity of 1 All other trademarks and copyrights are the property of their respective owners. and EVA of S1) (Use appropriate factor(s) from the tables provided. (before depreciation and tax) $90,000 Depreciation p.a. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Compute the net present value of this investment. During those years the company has been profitable, and it expects to continue to be profitable in the foreseeable future. The building is expected to generate net cash inflows of $15,000 per year for the next 30 years. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. Sign up for free to discover our expert answers. Assume Peng requires a 5% return on its investments. Use the following table: | | Present Value o. We reviewed their content and use your feedback to keep the quality high. Assume Peng requires a 10% return on its investments. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Required information (The following information applies to the questions displayed below.) The investment has zero salvage value. For (n= 10, i= 9%), the PV factor is 6.4177. Assume the company uses straight-line depreciation. Assume Peng requires a 10% return on its investments. The investment costs $45,000 and has an estimated $6,000 salvage value. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. What amount should Flower Company pay for this investment to earn an 11% return? The investment costs $59,400 and has an estimated $7,200 salvage value. 45,000+6000=51,000. Project 2 requires an initial investment of $4,000,000 and has a present value of cash flows of $6,000,000. Cash flow Assume Peng requires a 5% return on its investments. Peng Company is considering an investment expected to generate an average net income after taxes of $2,000 for three years. , e following two costs of production, respectively: (1) the paper; and (2) the authors' one-time fees. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. an average net income after taxes of $3,200 for three years. An asset costs $70,000 and is expected to have a $10,000 salvage value at the end of its 10-year life. The management of Samsung is planning to invest in a new companywide computerized inventory tracking system. Multiple Choice, returns on investment is computed in the following manner. 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. Ronis' investment in asset base is $1,500,000, and they assume a capital charge of 10%. A company has two investment choices that cost $3,000 each: one that brings in $10,000 in revenue at 8% interest in two years, and another that brings in $11,000 revenue at the same interest rate . Required information (The following information applies to the questions displayed below.] Good estimates are available for the initial investment and the a, Pito Company has been in operation for several years. Projected annual cash flows are: Year 1 $500,000 Year 2 $600,000 Year 3 $700,000 Year 4 $400,000 Calculate the NPV and the IRR. Question. The management of Bischke Corporation is investigating an investment in equipment that would have a useful life of 8 years. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. 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. The investment costs $56,100 and has an estimated $7,500 salvage value. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The project is expected to have an after-tax return of $250,000 in each of years 1 and 2. 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. Compute the payback period. Management predicts this machine has an 11-year service life and a $140,000 salvage value, and it uses s, A machine costs $400,000 and is expected to yield an after-tax net income of $9,000 each year. The investment costs $45,000 and has an estimated $6,000 salvage value. The investment costs $45,000 and has an estimated $6,000 salvage value. Furthermore, the implication of strategic orientation for . 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. projected GROSS cash flows from the investment are $150,000 per year. The current value of the building is estimated to be $120,000. gifts. What is the most that the company would be willing to invest in this, A company has a minimum required rate of return of 9%. Peng Company is considering an investment expected to generate an average net income after taxes of $2,200 for three years. , ided by total investment.. total investment is current assets (inventories, accounts receivables and cash) plus fixed assets. Compute this machines accounting rate of return. The investment costs $58, 500 and has an estimated $7, 500 salvage value. Assume Peng requires a 10% return on its investments. Yearly depreciation = (56,100 - 7,500) / 3 = $16,200.00. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. The company is considering an investment that would yield a cash flow of $20,000 in 5 years. Q: Peng Company is considering an investment expected to generate an average net. 2.72. The company is considering an investment that would yield an after-tax cash flow of $30,000 in four years. Capital investment - $100,000 Estimated useful life - 3 years Estimated salvage value - zero Estimated net cash inflow Year 1 - $50,000 Year 2 - $47,000 Year 3 - $44,000 Required rate, You have the following information on a potential investment: Capital Investment - $100,000 Estimated useful life - 3 years Estimated salvage value - zero Estimated net cash inflow: Year 1 - $50,000 Y, Lt. Dan Corporation invested $90,000 in manufacturing equipment. What is the present value, Strauss Corporation is making a $71,900 investment in equipment with a 5-year life. 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. All rights reserved. $1,950 for three years. Annual savings in cash operating costs are expected to total $200,000. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. 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.) Compute the net present value of this investment. View some examples on NPV. . The company's desired rate of return used in the present value calculations was, A company is considering investment in a project that costs Rs. What is the accountin, A company buys a machine for $77,000 that has an expected life of 6 years and no salvage value. QS 24-8 Net present value LO P3 Assume Peng requires a 15% return on its investments. The investment is expected to return the following cash flows, discounts at 8%. The machine is expected to last four years and have a salvage value of $50,000. For example: How much would you need to invest today at 10% compounded semiannually to accumulate $5,000 in 6 years from today? The founder asked you for $220,000 today and you expect to get $1,070,000 in 9 years. Assume that net income is received evenly throughout each year and straight-line depreciation is used. The estimated cash flow for the investment are as follows: N Description Cash flow ($) 0 price of the system Fo 1-4 revenue per, Joe Sixpack Inc. is considering an investment that will cost is $400,000. Assume Pang requires a 5% return on its investments. 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. Experts are tested by Chegg as specialists in their subject area. If a table of present v, Grouper Company owns equipment that cost $1,044,000 and has accumulated depreciation of $440,800. Determine the net present value, and ind. The company's required rate of return is 13 percent. Compute the net present value of this investment. The salvage value of the asset is expected to be $0. Assume the company uses straight-line . a. Compute Loon s taxable inco. investment costs $51,600 and has an estimated $10,800 salvage All other trademarks and copyrights are the property of their respective owners. The investment costs $45,600 and has an estimated $8,700 salvage value. The asset has no salvage value. The machine will cost $1,812,000 and is expected to produce a $203,000 after-tax net income to be re, A company can buy a machine that is expected to have a three-year life and a $23,000 salvage value. Assume Peng requires a 15% return on its investments. d) 9.50%. ), Exercise 26-11 BAP Corporation is reviewing an investment proposal. The cost of capital is 6%. Req, A company is contemplating investing in a new piece of manufacturing machinery. Assume Peng requires a 5% return on its investments. The investment costs$45,000 and has an estimated $6,000 salvage value. The investment costs $54,000 and has an estimated $7,200 salvage value. O, Reece Manufacturing Company is considering the following investment proposal: The firm uses the straight-line method of depreciation with no mid-year convention. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 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 Zinger Corporation is considering an investment that has the following data: Cash inflows occur evenly throughout the year. The investment costs $45,000 and has an estimated $6,000 salvage value. The investment costs $52,200 and has an estimated $9,000 salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Firm Value Young Corporation expects an EBIT of $16,000 every year forever. The investment costs $47,400 and has an estimated $8,400 salvage value. Using the orig, A building has a cost of $500,000 and accumulated depreciation of $40,000. For ex ample: What is the present value of $2,000 per year for 10 years assuming an annual interest rate of 9%. The company uses the straight-line method of d, Determine Present Value: You can invest in a machine that costs $500,000. 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). Peng Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. The investment costs $48,000 and has an estimated $10,200 salvage value. 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%. The investment costs $45,000 and has an estimated $10,800 salvage value. The fair value of the equipment is $476,000. Peng Company is considering an investment expected to generate Assume Peng requires a 15% return on its investments. The investment costs $45,000 and has an estimated $6,000 salvage value. Assume Peng requires a 15% return on its investments. The excess cost over the book value of an investment that is due to expected above-average earnings is labeled on the consolidated balance sheet as: a. Peng Company is considering an investment expected to generate an average net income after taxes of $2, 400 for three years. a. What is the present valu, Strauss Corporation is making an $85,200 investment in equipment with a 5-year life. The investment costs $45,600 and has an estimated $8,700 salvage value. Compute the net present value of this investment. The amount to be invested is $210,000. The following information applies to // Header code for stack // requesting to create source code It gives us the profitability and desirability to undertake the project at our required rate of return. The expected future net cash flows from the use of the asset are expected to be $580,000. Which of the following functional groups will ionize in Question: Peng Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. EV of $1. The facts on the project are as tabulated. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. The investment costs $48,900 and has an estimated $12,000 salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. The machine will cost $1,800,000 and is expected to produce a $200,000 after-tax net income to be rece, A company can buy a machine that is expected to have a three-year life and a $25,000 salvage value. In the next using the GC how can i determine the ratio of diastereomers. d. Loss on investment. 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. Compute the net present value of this investment. Accounting Rate of Return Choose Denominator: Choose Numerator: T = Accounting Rate of Return = Accounting rate of return 0, 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 $1950 for three years. The company's required, Crispen Corporation can invest in a project that costs $400,000. Get access to this video and our entire Q&A library, How to Calculate Net Present Value: Definition, Formula & Analysis. The investment costs $59.100 and has an estimated $6.900 salvage value. Management predicts this machine has an 11-year service life and a $60,000 salvage value, and it uses straight-line depreciation. 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. What is the most that the company would be willing to invest in this project? The payback period f. Elmdale Company is considering an investment that will return a lump sum of $743,100, 7 years from now. The machine will generate annual cash flows of $21,000 for the next three years. TABLE B.1 Present Value of 1 Rate Perlods 1% 2% 3% 4% 5% 6% 7% 8% 9% 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 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.7972 0.7561 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 08163 .793 0.7722 7513 7118 06575 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 0.5718 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 0.4972 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 0.4323 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 0.3759 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 0.3269 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 0.2843 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220 0.2472 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.2875 0.2149 0.8874 0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2567 0.1869 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2292 0.1625 0.8700 0.7579 0.6611 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2046 0.1413 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.1827 0.1229 0.8528 0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1631 0.1069 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1456 0.0929 0.8360 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1300 0.0808 0.8277 0.6864 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1161 0.0703 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1037 0.0611 0.7798 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0588 0.0304 0.7419 0.5521 0.4120 0.3083 0.2314 0.174 0.1314 0.0994 0.0754 0.0573 0.0334 0.0151 0.7059 0.5000 0.3554 0.2534 0.1813 0.1301 0.0937 0.0676 0.0490 0.0356 0.0189 0.0075 0.6717 0.4529 0.3066 0.2083 0.1420 0.0972 0.0668 0.0460 0.0318 0.0221 0.0107 0.0037 9 10 12 13 14 15 16 18 19 20 25 30 35 40 * Used to compute the present value of a known future amount. What is the depreciation expense for year two using the straight-line method? The investment costs $54,900 and has an estimated $8,100 salvage value. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation.
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