(before depreciation and tax) $90,000 Depreciation p.a. Investment required in equipment $530,000 ; Annual cash inflows $74,000 ; Salvage value $0 ; Li, Your company has been presented with an opportunity to invest in a project. Ferrell, Liang and Renneboog (2016) as well as Chang, Chen, Chen and Peng (2019) . The project is expected to have an after-tax return of $250,000 in each of years 1 and 2. Management predicts this machine has a 12-year service life and a $40,000 salvage value, and it uses straight-line depreciation. Capital investment $180,000 Estimated useful life 3 years Estimated salvage value 0 Estimated annual net cash inflow $75,000 Required rate of return 10% What is the net present value of the inv, If an asset costs $210,000 and is expected to have a $30,000 salvage value at the end of its 10-year life, and it generates annual net cash inflows of $30,000, the cash payback period is: a. 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. 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). Required information [The following information applies to the questions displayed below.) Assume Peng requires a 15% return on its investments. The investment costs $54,900 and has an estimated $8,100 salvage value. The net present value (NPV) is a capital budgeting tool. Compu, Pong Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. Assume the company uses straight-line . Com, Peng Company is considering an investment expected to generate an average net income after taxes of $2,200 for three years. The investment costs $54,900 and has an estimated $8,100 salvage value. A new operating system for an existing machine is expected to cost $690,000 and have a useful life of six years. A. The equipment will be depreciated on a straight-line basis over 5-year life and is expected to generate net cash inflows of $45,000 the first year, $65,000 the second year, and $, The Seago Company is planning to purchase $436,400 of equipment with an estimated seven-year life and no estimated salvage value. Required information Use the following information for the Quick Study below. 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. Compute a. (For calc, Natt Company is considering undertaking a project that would yield annual profits (after depreciation) of $68,000 for 5 years. Peng Company is considering an investment expected to generate Melton Company's required rate of return on capital budgeting projects is 16%. At a discount rate of 10 per, Zippydah Company has the following data at December 31, 2014. You can expect revenues net of any expense, except machine costs, of $150,000 at the end of each year for five years. 45,000+6000=51,000. Jimmy Co. seeks to earn an average rate of return of 18% on all capital projects. Peng Company is considering an investment expected to generate an average net income after taxes of $3,250 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. The investment costs $59,500 and has an estimated $9,300 salvage value. The net income after the tax and depreciation is expected to be P23M per year. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. All, Maude Company's required rate of return on capital budgeting projects is 9%. Peng Company is considering an investment expected to generate an average net income after taxes of $2,100 for three years. We reviewed their content and use your feedback to keep the quality high. The facts on the project are as tabulated. Management predicts this machine has a 10-year service life and a $105,000 salvage value, and it uses straight-line depreciation. (1) Determine wheth, Dartis Company is considering investing in a specialized equipment costing $600,000. The expected future net cash flows from the use of the asset are expected to be $580,000. The cost of capital is 6%. Determine the net present value, and ind. 51,000/2=25,500. Learn about what net present value is, how it is calculated both for a lump sum and for a stream of income over multiple years. 15900 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. Using the original cost of the asset, the unadjusted rate of return o, The Charles Company is planning to invest $450,000 in a factory machine. 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. A company purchased a plant asset for $55,000. The amount, to be invested, is $100,000. The net present value is given as the present value of inflows minus the present value of outflows from the project. Yokam Company is considering two alternative projects. Our experts can answer your tough homework and study questions. ), Exercise 26-11 BAP Corporation is reviewing an investment proposal. 2003-2023 Chegg Inc. All rights reserved. b) 4.75%. Assume the company uses straight-line . What is the accountin, A company buys a machine for $77,000 that has an expected life of 6 years and no salvage value. It gives us the profitability and desirability to undertake the project at our required rate of return. Compute the net present value of this investment. The salvage value of the asset is expected to be $0. Flower Company is considering an investment which will return a lump sum of $2,500,000 six years from now. Negative amounts should be indicated by a minus sign.) 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. Talking on the telephon The investment costs $57,600 and has an estimated $6,000 salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of $3,200 for three years. The investment costs $45,600 and has an estimated $6,600 salvage value. For l6, = 8%), the FV factor is 7.3359. 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. Experts are tested by Chegg as specialists in their subject area. 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 . The company's required r, Strauss Corporation is making an $85,900 investment in equipment with a 5-year life. The, Shep Corp. is considering a 20-year investment with a net present value of cash flows of -$20,800 and an uncertain salvage value. Experts are tested by Chegg as specialists in their subject area. In the next using the GC how can i determine the ratio of diastereomers. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. The investment costs $56,100 and has an estimated $7,500 salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. 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. 2003-2023 Chegg Inc. All rights reserved. Compute the net present value of this investment. d) Provides an, Dango Corporation is reviewing an investment proposal. Yearly depreciation = (56,100 - 7,500) / 3 = $16,200.00. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. a. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. 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. The investment costs $45,000 and has an estimated $6,000 salvage value. 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, Elmdale Company is considering an investment that will return a lump sum of $725,500, 6 years from now. Stop procrastinating with our smart planner features. 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. What is the present valu, Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. Assume Peng requires a 15% return on its investments. d) 9.50%. The income tax depreciation method referred to as CCA: a) Allows a corporation some flexibility in choosing the class an asset is assigned to. The investment costs $51,900 and has an estimated $10,800 salvage value. The company is considering an investment that would yield an after-tax cash flow of $30,000 in four years. 1, A machine costs $180,000 and will have an eight-year life, a $20,000 salvage value, and straight-line depreciation is used. 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. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. b) Ignores estimated salvage value. The company anticipates a yearly net income of $3,800 after taxes of 16%, with the cash flows to be received evenly throughout each year. 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 machine will cost $1,824,000 and is expected to produce a $206,000 after-tax net income to be re. Yearly cash inflows = 3,300 + 16,200 = Our experts can answer your tough homework and study questions. Assume the company uses straight-line depreciation. $1,950 for three years. 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. The company anticipates a yearly after-tax net income of $1,805. Learn about what net present value is, how it is calculated both for a lump sum and for a stream of income over multiple years. What amount should Elmdale Company pay for this investment to earn a 8% return? 76,000 b. The business environment, namely market uncertainty and competition intensity, is also analysed in association with the firm's strategic orientation. The investment costs $45,300 and has an estimated $7,500 salvage value. a) construct an influence diagram that relates these variables X What method, A machine costs $400,000 and is expected to yield an after-tax net income of $9,000 each year. If the accounting rate of return is 12%, what was the purchase price of the mac. Common stock. Compute the net present value of this investment. 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. 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. 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 investment costs $45,000 and has an estimated $6,000 salvage value. $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. Assume that net income is received evenly throughout each year and straight-line depreciation is used. The current value of the building is estimated to be $120,000. Experts are tested by Chegg as specialists in their subject area. Compute the net present value of this investment. View some examples on NPV. Assume the company uses straight-line . Required intormation Use the following information for the Quick Study below. a) 2.85%. 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 . The building is expected to generate net cash inflows of $15,000 per year for the next 30 years. The new present value of after tax cash flows from an investment less the amount invested. Using the straight line method of depreciation, calculate accumul, Lucky Company Is considering a capital investment in machinery: Initial investment $1,400,000 Residual value $300,000 Expected annual net cash inflows $200,000 Expected useful life 10 years Required r, The following data concerns a proposed equipment purchase: Cost $161,100 Salvage value $4,900 Estimated useful life 4 years Annual net cash flows $47,000 Depreciation method Straight-line The annual average investment amount used to calculate the accounti, You have the following information on a potential investment: Capital investment $85,000 Estimated useful life 4 years Estimated salvage value $0 Estimated annual net cash inflows: Year 1 $18,000 Ye, The Seago Company is planning to purchase $524,500 of equipment with an estimated seven-year life and no estimated salvage value. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. Assume Peng requires a 5% return on its investments. 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 $1,950 for three years. Capital investment $900,000 Estimated useful life 6 years Estimated salvage value zero Estimated annual net cash inflow $213,000 Required, Sparky Company invested in an asset with a useful life of 5 years. 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 . using C++ Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. Compute this machine's accoun, A machine costs $500,000 and is expected to yield an after-tax net income of $15,000 each year. Present value of an annuity of 1 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 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%. 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. 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 . Multiple Choice, returns on investment is computed in the following manner. Assume the company uses straight-line depreciation. Each investment costs $480. On whether to accept or reject a project, the NPV is interpreted on the result of the calculation. (FV of |1, PV of $1, FVA of $1 and PVA of $1). 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. (20-year, 12% pr, What is the NPV and IRR for the two investments options below? Ignore income taxes. The investment costs$45,000 and has an estimated $6,000 salvage value. (1) Determine whet, Lt. Dan Corporation invested $80,000 in a manufacturing equipment. Assume the company uses straight-line depreciation. Compute the net present value of this investment. The investment costs $45,300 and has an estimated $7,500 salvage value. Assume Peng requires a 15% return on its investments. The asset has an estimated salvage value of $12,000, and an estimated useful life of 10 years. 94% of StudySmarter users get better grades. Compute the accounting rate of return for this. Peng Company is considering an investment expected to generate an average net income after taxes of $2,000 for three years. Accounting Rate of Return Choose Numerator: Choose Denominator: Accounting Rate of Return nnual after-tax net incomeAnnual average investentAccounting rate of return 3,500S 27,1501= 12.891 % The company's required rate of return is 12 percent. The investment has zero salvage value. Assu, Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $3,100 for three years. Annual cash flow This site is using cookies under cookie policy . What is the present value, Strauss Corporation is making a $71,900 investment in equipment with a 5-year life. 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. X Required intormation Use the following information for the Quick Study below. Calculate the payback period for the proposed e, You have the following information on a potential investment. The company's required, Crispen Corporation can invest in a project that costs $400,000. [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. Peng Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. 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. All other trademarks and copyrights are the property of their respective owners. Assume the company uses straight-line depreciation (PV of $1. Assume Peng requires a 10% return on its investments. The net cash flows are estimated to be $7,610 per year for the next 5 years and no salvage value is anticipated. The company is expected to add $9,000 per year to the net income. Peng Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. The company has projected the following annual for the investment. Compute the net present value of this investment. Assume all sales revenue is received, Elmdale Company is considering an investment that will return a lump sum of $769,700, 7 years from now.