The company s required rate of return is 13 percent. 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. The investment costs $54,000 and has an estimated $7,200 salvage value. Yearly depreciation = (56,100 - 7,500) / 3 = $16,200.00. The approximate net present value of this project, The Zinger Corporation is considering an investment that has the following data: Year 1 Year 2 Year 3 Year 4 Year 5 Investment $17,500 $4,900 Cash inflow $3,900 $3,900 $10,000 $5,900 $5,900 Cash inflows occur evenly throughout the year. Assume Peng requires a 10% return on its investments. Assume Peng requires a 15% return on its investments. #define An irrigation canal contractor wants to determine whether he The average stock currently returns 15% and short-term treasury bills are offering 6%. Assume Peng requires a 15% return on its investments. It is mainly used to evaluate a prospective project whether it would be profitable to the investor or not. 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. (For calc, Natt Company is considering undertaking a project that would yield annual profits (after depreciation) of $68,000 for 5 years. The following information applies to // Header code for stack // requesting to create source code 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. 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. Project 2 requires an initial investment of $4,000,000 and has a present value of cash flows of $6,000,000. The expected average rate of return, giving effect to depreciation on investment is 15%. Transcribed image text: Peng Company is considering an investment expected to generate an average net income after taxes of $2, 400 for three years. Assume Peng requires a 10% return on its investments, compute the net present value of this investment. Assume Peng requires a 15% return on its investments. What is Roni, You are considering an investment in First Allegiance Corp. 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. 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.) Depreciation is calculated using the straight-line method. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Createyouraccount. Required information [The following information applies to the questions displayed below.) The investment costs $45,600 and has an estimated $8,700 salvage value. 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. 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. Accounting Rate of Return = Net Income / Average Investment. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Assume the company uses Assume Peng requires a 10% return on its investments. The company uses the straight-line method of d, Determine Present Value: You can invest in a machine that costs $500,000. The company uses the straight-line method of depreciation and has a tax rate of 40 per cent. 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). Peng Company is considering an investment expected to generate an average net income after taxes of $3,250 for three years. Assume Peng requires a 5% return on its investments. 2003-2023 Chegg Inc. All rights reserved. Strauss Corporation is making an $89,000 investment in equipment with a 5-year life. The fair value of the equipment is $464,000. EV of $1. Required information [The following information applies to the questions displayed below.) 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. What is the depreciation expense for year two using the straight-line method? Compute the accounting sane of return for this investment assume the company uses straight-line depreciation. d) Provides an, Dango Corporation is reviewing an investment proposal. Required information Use the following information for the Quick Study below. The company's required rate of return is 11 percent. 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. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. Each investment costs $480. Createyouraccount. The company has an all-equity capital structure, and its cost of equity capital is 15 percent. Compute this machine's accounti, A machine costs $200,000 and is expected to yield an after-tax net income of $5,040 each year. Assume Peng requires a 10% return on its investments. For example: How much would you need to invest today at 10% compounded semiannually to accumulate $5,000 in 6 years from today? Compute the net present value of this investment. The investment costs$45,000 and has an estimated $6,000 salvage value. 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. Compute the net present value of this investment. 76,000 b. The NPV is computed as: {eq}\displaystyle \text{Present value of annuity (PVA) } = P * \frac{1 - (1 + r)^{-t}}{r} {/eq}, Become a Study.com member to unlock this answer! Note: NPV is always a sensitive problem bec. 8 years b. Fair value method c. Historical cost m, Blue Fin Inc. requires all capital investments to generate a minimum internal rate of return of 15%. The investment costs $45,000 and has an estimated $6,000 salvage value. Assume the company requires a 12% rate of return on its investments. Assume the company uses straight-line depreciation. 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 investment costs $58, 500 and has an estimated $7, 500 salvage value. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. It expects the free cash flow to grow at a constant rate of 5% thereafter. Calculate the payback period for the proposed e, You have the following information on a potential investment. True, Richol Corp. is considering an investment in new equipment costing $180,000. If a table of present v, Grouper Company owns equipment that cost $1,044,000 and has accumulated depreciation of $440,800. , ided by total investment.. total investment is current assets (inventories, accounts receivables and cash) plus fixed assets. Its aim is the transition to a climate-neutral and . Compute the payback period. The Peng Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. View some examples on NPV. The payback period, You are considering investing in a start up company. Find step-by-step Accounting solutions and your answer to the following textbook question: Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. (PV of $1. The new present value of after tax cash flows from an investment less the amount invested. Jimmy Co. seeks to earn an average rate of return of 18% on all capital projects. There is a 77 percent chance that an airline passenger will The amount to be invested is $100,000. The salvage value of the asset is expected to be $0. 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. Compute the payback period. Prepare the journal, You have the following information on a potential investment. Compu, Pong Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. The investment costs $45,600 and has an estimated $8,700 salvage value. The initial cost and estimates of the book value of the investment at the end of the year, the net cash flows for each year, and the net income, Crane Company is considering an investment that will return a lump sum of $898, 900, 6 years from now. O, Reece Manufacturing Company is considering the following investment proposal: The firm uses the straight-line method of depreciation with no mid-year convention. Negative amounts should be indicated by a minus sign.) The company uses straight-line depreciation. Comp, Pang Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $2,600 for three years. If an asset costs $70,000 and is expected to have a $10,000 salvage value at the end of its ten-year life and generates annual net cash inflows of $10,000 each year, the cash payback period is _____. The net present value is given as the present value of inflows minus the present value of outflows from the project. To find the NPV using a financial calacutor: 1. a) Prepare the adjusting entries to report 1. The investment costs $45,000 and has an estimated $10,800 salvage value. The building is expected to generate net cash inflows of $15,000 per year for the next 30 years. The lease term is five years. Assume the company uses straight-line depreciation. Compute the net present value of this investment. The present value of the future cash flows, at the company's desired rate of re, E company is a lessee with a capital lease. a. Compute this machine's accoun, A machine costs $505,000 and is expected to yield an after-tax net income of $20,000 each year. 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 $100,000 salvage value, and it uses straight-line depreciation. Required information (The following information applies to the questions displayed below.) a. Stop procrastinating with our smart planner features. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. 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. 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. 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 $2,200 for three years. To help in this, compute the cost of capital for the firm for the following: a. The asset has no salvage value. What is the internal rate of return if the company buys this machine? Peng Company is considering an Investment expected to generate an average net income after taxes of $3,000 for three years. The founder asked you for $220,000 today and you expect to get $1,070,000 in 9 years. Assume Peng requires a 15% return on its investments. Tradin, Drake Corporation is reviewing an investment proposal. Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. Talking on the telephon