Elijah Enterprises will need to upgrade the computer system in 10 years. They anticipate the upgrade to cost $99,000. If the discount rate is 10%, what will be the required yearly investment needed to obtain the money for the upgrade? Round your (1+R)^n value to 2 decimal places and use that number for your final amount required rounded to the nearest dollar. Future Value / (1+R)^n = Amount Required / = What would be required if the discount rate was 6%? Future Value / (1+R)^n = Amount Required / =

Elijah Enterprises will need to upgrade the computer system in 10 years. They anticipate the upgrade to cost $99,000. If the discount rate is 10%, what will be the required yearly investment needed to obtain the money for the upgrade? Round your (1+R)^n value to 2 decimal places and use that number for your final amount required rounded to the nearest dollar. Future Value / (1+R)^n = Amount Required / = What would be required if the discount rate was 6%? Future Value / (1+R)^n = Amount Required / =

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5EB: A grocery store is considering the purchase of a new refrigeration unit with an Initial Investment...

See similar textbooks

Future Value	/	(1+R)^n	=	Amount Required
	/		=

Future Value	/	(1+R)^n	=	Amount Required
	/		=

Similar questions

Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided manufacturing system. The annual net cash benefits and savings associated with the system are described as follows: The system will cost 9,000,000 and last 10 years. The companys cost of capital is 12 percent. Required: 1. Calculate the payback period for the system. Assume that the company has a policy of only accepting projects with a payback of five years or less. Would the system be acquired? 2. Calculate the NPV and IRR for the project. Should the system be purchasedeven if it does not meet the payback criterion? 3. The project manager reviewed the projected cash flows and pointed out that two items had been missed. First, the system would have a salvage value, net of any tax effects, of 1,000,000 at the end of 10 years. Second, the increased quality and delivery performance would allow the company to increase its market share by 20 percent. This would produce an additional annual net benefit of 300,000. Recalculate the payback period, NPV, and IRR given this new information. (For the IRR computation, initially ignore salvage value.) Does the decision change? Suppose that the salvage value is only half what is projected. Does this make a difference in the outcome? Does salvage value have any real bearing on the companys decision?
A grocery store is considering the purchase of a new refrigeration unit with an Initial Investment of $412,000, and the store expects a return of $100,000 in year one, $72000 in years two and three, $65,000 in years four and five, and $38,000 in year six and beyond, what is the payback period?
Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 8%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?
Elijah Enterprises will need to upgrade the computer system in 6 years. They anticipate the upgrade to cost $106,200. If the discount rate is 13%, what will be the required yearly investment needed to obtain the money for the upgrade?Round your (1+R)^n value to 2 decimal places and use that number for your final amount required rounded to the nearest dollar.
You can purchase an equipment for $4,000. The equipment will provide benefits worth $900 a year. The expected life of the equipment is 8 years. It is expected that the price of the equipment will decrease by 15% per year. If the discount rate is 12%, would you buy the equipment today or will wait to purchase? When is the best time to purchase it? give excel file solution
You are considering purchasing a new punch press machine. This machine will have an estimated service life of 10 years. The expected after-tax salvage value at the end of service life will be 10% of the purchase cost. Its annual after-tax operating cash flows are estimated to be $60,000. If you can purchase the machine at $308,758, what is the expected rate of return on this investment? Answer in Excel
You found your dream home! The down payment is $29,000. However, you still need 40% of the down payment plus required improvements will cost another 18% (First: what total % of the down payment do you need? _____). You borrow the money from your Savings & Loan, but you must pay it back within 10 years at an interest rate of 14%. Using this amount as your principal P, calculate the future value A using:2) Simple Interest
Dunder Mitfin plans to install a computer system to measure the dimensions of products so thar the proper size boxes can be used to ship items. This well save packing materials, cardboard, and labor. If the savings will be $132310 the first year and increases by $ 9521each year for 9 years. What is the present worth of the system at an interest rate of 12%.Write your answer to two decimal places
An example of how to calculate net present value is done using the following. Imagine you have been given an investment opportunity wherein if you invest $1,200 today, you will receive $650 dollars at the end of each year for the next 5 years. You could separately choose to invest your money at 10% interest each year. Should you take the investment opportunity? To find the answer, use the NPV formula:
Suppose you have opened an MRI clinic and you are able to purchase a new MRI machine for $1 million. You plan to see 2000 patients per year, and you have determined that your MRI machine at that rate of use should last 10 years. Given a 5% rate of interest, use an annuity calculation to estimate the annual cost of an MRI per patient. Suppose that you could use the machine for 3 years and then sell it for $500,000. What would your annual cost per patient be in that case? Suppose you know that inflation is going to be 10% per year and that you will use the machine for 3 years and then be able to sell it for $800,000 (note that the $800,000 is measured in units of dollars 3 years from now). What then is your annual cost per patient and is your answer in dollars today or dollars three years from now?
A store plans on investing on a new grill oven that costsP100,000. It will generate revenues of P2,500 per dayand expenses of P800 per day. Suppose the store will beoperating 320 days in a year. Evaluate the acceptabilityof this investment if the grill oven will have a lifespan ofsix years and MARR is 10% per year. Use PW method.What is IRR?
The price of a car you want is $36,000 today. Its price is expected to increase by $1000 each year. You now have $22,000 in an investment account, which is earning 8% per year. How many years will it be before you have enough to buy the car without borrowing any money? (Use Goal Seek to determine the time taken.) The time taken is determined to be..... years.