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The company anticipates a yearly net income of $3,650 after taxes of 22%, with the cash flows to be received evenly throughout each year. 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). What is the return on investment? The company has an all-equity capital structure, and its cost of equity capital is 15 percent. Management estimates that this machine will generate annual after-tax net income of $540. The annual depreciation cost is 10% of fixed capital investment. 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. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. 8 years b. copyright 2003-2023 Homework.Study.com. Compute the net present value of each potential investment. Management predicts this machine has a 9-year service life and a $80,000 salvage value, and it uses strai, A machine costs $200,000 and is expected to yield an after-tax net income of $5,000 each year. earnings equal sales minus the cost of sales The investment costs $48,600 and has an estimated $6,300 salvage value. Cullumber Company is considering an investment that will return a lump sum of $942,800, 3 years from now. What is the accountin, A company buys a machine for $77,000 that has an expected life of 6 years and no salvage value. The company s required rate of return is 13 percent. The company's required, A company is considering a proposal that requires an initial investment of $91,100, has predicted net cash inflows of $30,000 per year for four years and no salvage value. The following estimates are available: Initial cost = $279,800 Cost of capital = 12% Estima, Strauss Corporation is making an $87,150 investment in equipment with a 5-year life. Using the original cost of the asset, the unadjusted rate of return on, A machine costs $600,000 and is expected to yield an after-tax net income of $23,000 each year. Comp, Pang 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 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. (Round each present value calculation to the nearest dollar. 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. 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 . Assume Peng requires a 10% return on its investments. The salvage value of the asset is expected to be $0. value. The corporate tax rate is 35 percent. Required information [The folu.ving information applies to the questions displayed below.) 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. What is the accountin, A company buys a machine for $62,000 that has an expected life of 7 years and no salvage value. Transcribed image text: Peng Company is considering an investment expected to generate an average net income after taxes of $2, 400 for three years. A machine costs $700,000 and is expected to yield an after-tax net income of $52,000 each year. The facts on the project are as tabulated. The investment costs $49,500 and has an estimated $10,800 salvage value. 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. You have the following information on a potential investment. Assume Peng requires a 10% return on its investments. To help in this, compute the cost of capital for the firm for the following: a. The investment costs $49,000 and has an estimated $8,800 salvage value. Accounting Rate of Return Choose Denominator: Choose Numerator: - Accounting Rate of Return Accounting rate of return. The cost of the asset is $120,000, Babirusa Company is considering the following investment: Assume straight-line depreciation is used. The investment costs $48,000 and has an estimated $10,200 salvage value. Corresponding with the IRS in writing Compute. 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. What is the present value, Strauss Corporation is making a $91,800 investment in equipment with a 5-year life. 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. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction. A company is considering investing in a new machine that requires a cash payment of $47,947 today. The investment costs $45,000 and has an estimated $6,000 salvage value. an average net income after taxes of $3,200 for three years. 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 investment costs $45,000 and has an estimated $6,000 salvage value. Ass, Peng Company is considering an Investment expected to generate an average net income after taxes of $3,000 for three years. The net present value of the investment is A) $1,470 B) ($13,550) C) $6,450, The Zinger Corporation Is considering an Investment that has the following data: Cash Inflows occur evenly throughout the year. 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. See Answer. 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 $3,300 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. Peng Company is considering an investment expected to generate an average net income after taxes of $2, 400 for three years. 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. 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 company s required rate of return is 14 percent. The following information applies to // Header code for stack // requesting to create source code 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. The estimated life of the machine is 5yrs, with no salvage value. Compute the net present value of this investment. If the accounting ra, A company buys a machine for $76,000 that has an expected life of 7 years and no salvage value. A machine costs $210,000, has a $14,000 salvage value, is expected to last ten years, and will generate an after-tax income of $43,000 per year after straight-line depreciation. Compute the payback period. Input the cash flow values by pressing the CF button. . Req, A company is contemplating investing in a new piece of manufacturing machinery. The fair value of the equipment is $464,000. 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 Pang requires a 5% return on its investments. Peng Company is considering an investment expected to generate 2. 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. The company has projected the following annual cash flows for the investment. A company buys a machine for $76,000 that has an expected life of 6 years and no salvage value. During those years the company has been profitable, and it expects to continue to be profitable in the foreseeable future. It generates annual net cash inflows of $10,000 each year. #ifndef Stack_h Assume the company requires a 12% rate of return on its investments. The management of Samsung is planning to invest in a new companywide computerized inventory tracking system. Assume the company uses straight-line depreciation. 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, Drake Corporation is reviewing an investment proposal. You would need to invest S2,784 today ($5,000 0.5568). a cost of $19,800. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. You w, A machine that cost $720,000 has an estimated residual value of $60,000 and an estimated useful life of eleven years. Project 2 requires an initial investment of $4,000,000 and has a present value of cash flows of $6,000,000. Assume the company uses straight-line depreciation. 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 is expected to add $9,000 per year to the net income. First we determine the depreciation expense per year. Assume Peng requires a 5% return on its investments. 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 $3,000 for three years. Compute the accounting sane of return for this investment assume the company uses straight-line depreciation. 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.] Calculate the payback period for the proposed e, You have the following information on a potential investment. 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 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. 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.) , e following two costs of production, respectively: (1) the paper; and (2) the authors' one-time fees. Yokam Company is considering two alternative projects. 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. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. The business environment, namely market uncertainty and competition intensity, is also analysed in association with the firm's strategic orientation. The investment costs $47,400 and has an estimated $8,400 salvage value. 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. The machine will generate annual cash flows of $21,000 for the next three years. The lease term is five years. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. The Longlife Insurance Company has a beta of 0.8. What lump-sum amount should the company invest now to have the $370,000 available at the end of the eight-year period? 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. The cost of the investment is. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Compute the net present value of this investment. The building is expected to generate net cash inflows of $20,000 per year for the next 30 years. 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. For (n= 10, i= 9%), the PV factor is 6.4177. Accounting Rate of Return = Net Income / Average Investment. Compute the net present value of this investment. Calculate its book value at the end of year 10. Explain. Required information (The following information applies to the questions displayed below.] The asset is recorded at $810,000 and has an economic life of eight years. 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. Assume Peng requires a 5% return on its investments. 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. Assume Peng requires a 15% return on its investments. What is Roni, You are considering an investment in First Allegiance Corp. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. The payback period f. Elmdale Company is considering an investment that will return a lump sum of $743,100, 7 years from now. Required information [The following information applies to the questions displayed below.) What is the most that the company would be willing to invest in this project? The amount, to be invested, is $100,000. Compute the net present value of this investment. Goodwill. Use the following table: | | Present Value o. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. a) 2.85%. The founder asked you for $220,000 today and you expect to get $1,070,000 in 9 years. View some examples on NPV. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. Note: NPV is always a sensitive problem bec. d) 9.50%. Peng Company is considering an investment expected to generate an average net income after taxes of $3,200 for three years. The equipment has a useful life of 5 years and a residual value of $60,000. The company is expected to add $9,000 per year to the net income. The company anticipates a yearly after-tax net income of $1,805. Compute this machine's accounti, On 1/1, a company buys equipment with a cost of $8,100, an estimated salvage value of $1,100, and an estimated useful life of 7 years. The investment costs $49,800 and has an estimated $11,400 salvage value. The present value of the future cash flows at the company's desired rate of return is $100,000. Peng Company is considering an investment expected to generate an average net income after taxes of $3,250 for three years. Createyouraccount. Assume the company uses straight-line depreciation (PV of $1. It is mainly used to evaluate a prospective project whether it would be profitable to the investor or not. The new present value of after tax cash flows from an investment less the amount invested. It expects the free cash flow to grow at a constant rate of 5% thereafter. The investment costs $45,000 and has an estimated $6,000 salvage value. What is the NPV of the investment, The Zinger Corporation is considering an investment that has the following data: Year 1 Year 2 Year 3 Year 4 Year 5 Investment $8,000 $3,000 Cash inflow $2,000 $2,000 $5,000 $4,000 $4,000 Cash inflows occur evenly throughout the year. Multiple Choice, returns on investment is computed in the following manner. What method, A machine costs $400,000 and is expected to yield an after-tax net income of $9,000 each year. What is the payback period in years ap, The Montana Company has decided to invest in a project that is expected to produce the following cash flows: $12,500 (year 1), $14,000 (year 2) and $9,000 (year 3). 17 US public . What is the present value, Strauss Corporation is making a $71,900 investment in equipment with a 5-year life. (Round your computations and answers to 0 decimal p, BAP Corporation is reviewing an investment proposal. 2003-2023 Chegg Inc. All rights reserved. and EVA of S1) (Use appropriate factor(s) from the tables provided. The system is expected to generate net cash flows of $13,000 per year for the next 35 years. a) construct an influence diagram that relates these variables EV of $1. 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. Using a sample of Chinese-listed firms with key soil pollution regulation from 2013 to 2020, this study utilized the Difference-in-Differences method . turnover is sales div Peng Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. (before depreciation and tax) $90,000 Depreciation p.a. The company pays an operating tax rate of 30%. $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. Each investment costs $480. 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. What is the depreciation expense for year two using the straight-line method? Req, CPA corporation is considering an investment with a cost of $5,000,000 an estimate useful life of 5 years, and no salvage value. All rights reserved. Negative amounts should be indicated by #12 (1) Determine whet, Lt. Dan Corporation invested $80,000 in a manufacturing equipment. The investment costs $45,600 and has an estimated $8,700 salvage value. 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 company uses the straight-line method of d, Determine Present Value: You can invest in a machine that costs $500,000. Compute the net present value of this investment. Melton Company's required rate of return on capital budgeting projects is 16%. Assume that net income is received evenly throughout each year and straight-line depreciation is used. The estimated cash flow for the investment are as follows: N Description Cash flow ($) 0 price of the system Fo 1-4 revenue per, Joe Sixpack Inc. is considering an investment that will cost is $400,000. The investment costs $47,400 and has an estimated $8,400 salvage value. 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). The present value of an annuity due for five years is 6.109. The net present value (NPV) is a capital budgeting tool. 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! Crispen normally uses a 10 percent discount rate to evaluate projects but feels it should use 12 per. 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. What is the annual depreciation expense using the straight line method? The company uses the straight-line method of depreciation and has a tax rate of 40 per cent. What is the present value, The Best Manufacturing Company is considering a new investment. Peng Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years.