A. Management predicts this machine has a 8-year service life and a $80,000 salvage value, and it uses strai, A machine costs $300,000 and is expected to yield an after-tax net income of $9,000 each year. Compute the accounting rate of return for this. Management predicts this machine has an 8-year service life and a $40,000 salvage value, and it uses straight-line depreciation. Capital investment - $15,000 Estimated useful life - 3 years Estimated salvage value - zero Estimated net cash inflow Year 1 - $7,000 Year, A company bought a machine that has an expected life of 7 years and no salvage value. Assume that net income is received evenly throughout each year and straight-line depreciation is used. Cash Flow Annual cash flow Present Value of an Annuity of1 Residual value Present Value of 1 Select Chart Amount x PV FactorPresent Value $ 8,700 x Present value of cash inflows Immediate cash outflows Net present value 45,600 The investment costs $45,600 and has an estimated $8,700 salvage value. (FV of |1, PV of $1, FVA of $1 and PVA of $1). 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 _____. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three 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. Experts are tested by Chegg as specialists in their subject area. Assume the company uses straight-line depreciation. Depreciation is calculated using the straight-line method. 8 years b. Peng Company is considering an investment expected to generate an The Galley purchased some 3-year MACRS property two years ago at The IRR on the project is 12%. Q: Peng Company is considering an investment expected to generate an average net. All rights reserved. Com, Peng Company is considering an investment expected to generate an average net income after taxes of $2,200 for three years. 8 years b. The new present value of after tax cash flows from an investment less the amount invested. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction. 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 $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. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. The expected future net cash flows from the use of the asset are expected to be $580,000. Project 1 requires an initial investment of $400,000 and has a present value of cash flows of $1,100,000. $2,000 per year for 10 years is the equivalent of $12,835 today ($2,000 6.4177) What is the minimum salvage value that would make the investment attractive assuming a discount rate of 12%? Management predicts this machine has a 10-year service life and a $105,000 salvage value, and it uses straight-line depreciation. 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. 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? Crispen normally uses a 10 percent discount rate to evaluate projects but feels it should use 12 per. Solved Peng Company is considering an investment expected to - Chegg 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 expected average rate of return, giving effect to depreciation on investment is 15%. The investment costs $45,600 and has an estimated $8,700 salvage value. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. copyright 2003-2023 Homework.Study.com. Assume the company uses straight-line depreciation (PV of $1. Compu, A company constructed its factory with a fixed capital investment of P120M. Carbon capture and storage (CCS) brings new entrants to subsurface exploration and reservoir engineering who require very high levels of confidence in the technology, in the geological analysis and in understanding the risks before committing large We reviewed their content and use your feedback to keep the quality high. The investment has zero salvage value. Year 0 ($400,000) initial investment Year 1 $140,000 Year 2 120,000 Year 3 100,000 Year 4 80,000, A company has a minimum required rate of return of 10%. Furthermore, the implication of strategic orientation for . Amount x PV Factor = Present Value Cash Flow Annual cash flow Select Chart Present Value of an Annuity of 1 II Residual value II Net present value. Peng Company is considering an investment expected to generate an average net income after taxes of $2,700 for three years. d) 9.50%. All other trademarks and copyrights are the property of their respective owners. Using the orig, A building has a cost of $500,000 and accumulated depreciation of $40,000. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Negative amounts should be indicated by a minus sign.) EV of $1. The company anticipates a yearly net income of $3,300 after taxes of 30%, with the cash flows to be rece, A company bought a machine that has an expected life of seven years and no salvage value. Thomas Company can acquire an $850,000 lathe that will benefit the firm over the next 7 years. The company has projected the following annual cash flows for the investment. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. Dynamic modeling and analysis of multi-product flexible production line 6 years c. 7 years d. 5 years. Assume the company uses straight-line depreciation. Assume Peng requires a 10% return on its investments. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. straight-line depreciation What amount should Cullumber Company pay for this investment to earn a 12% return? Compute the net present value of this investment. The company is considering an investment that would yield a cash flow of $20,000 in 5 years. What amount should Elmdale Company pay for this investment to earn a 12% return? Solution: Annual depreciation = (Cost - Salvage value) / useful life = ($45,600 - $8,700) / 3 = $12,300 Annual cash i. X 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. The amount, to be invested, is $100,000. O, Reece Manufacturing Company is considering the following investment proposal: The firm uses the straight-line method of depreciation with no mid-year convention. The company's required rate of return is 12 percent. PV factor 15900 Assume Peng requires a 15% return on its investments. 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. 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. QS 11-8 Net present value LO P3 Peng Company is considering an 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. Required information [The following information applies to the questions displayed below.) 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, 400 for three years. Assume Peng requires a 15% return on its investments. The investment is expected to return the following cash flows, discounts at 8%. 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%. 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. Assume Pang requires a 5% return on its investments. Peng Company is considering an investment expected to generate an The investment costs $45,000 and has an estimated $6,000 salvage value. Everything you need for your studies in one place. Negative amounts should be indicated by a minus sign.) 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. Peng Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. Management predicts this machine has a 12-year service life and a $40,000 salvage value, and it uses straight-line depreciation. 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. What lump-sum amount should the company invest now to have the $370,000 available at the end of the eight-year period? Enter the email address you signed up with and we'll email you a reset link. Assume Peng requires a 5% return on its investments. The investment costs $47,400 and has an estimated $8,400 salvage value. The company requires a 10% rate of return on its investments. Firm Value Young Corporation expects an EBIT of $16,000 every year forever. Given the riskiness of the investment opportunity, your cost of capital is 27%. The investment costs $48,600 and has an estimated $6,300 salvage value. The salvage value of the asset is expected to be $0. 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.
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