Portland Savings and Loan is considering new computersoftware, which, because of installation and training cost,will have an unusual pattern of net receipts. The expected receiptsare: $20,000 in year 1, nothing in the next yea r, $30,000 in year 3,and $50,000 in year 4. At an interest rate of 6% what is the presentvalue of these receipts?
Q: g out a loan and buying a small truck to save costs on deliveries. The truck costs $60000 and is…
A: NPV stands for net present value which implies the concept of evaluating the value of future…
Q: The makers of Lifestraw, a filter designed to allow the user to drink water safely from a stream,…
A: Present value is the present worth of any sum of money to be received in the future at a specified…
Q: ISA is planning to spend $650,000 on a new marketing campaign. They believe that this action will…
A: Net Present Value = Present value of Cash Inflows – Initial investment in the project
Q: Keener Clothiers Inc. is considering investing $2 million in an automatic sewing machine to produce…
A: Net present value is a capital budgeting technique, where projects are accepted when NPV is…
Q: Stationery Supplies is considering installing an inventory control system in itsstore in Provo,…
A: Computation:
Q: A convenience store is looking into the possibility of installing a 24/7-automated refill system to…
A: Annual worth method we need to find out total annual cost of operating the equipment and compare…
Q: Determine the NPV for the following: An information system will cost $95,000 to implement over…
A: According to the information provided: Cost in Year 0 = $95000 Savings in Year 1 = $30000 Saving in…
Q: A university's college of engineering would like to determine how much it will cost to keep its…
A: Present value: The worth of the cash flow or the stream of the cash flows to be received in the…
Q: A design firm is considering investing in a software suite that costs $200,000. It estimates that…
A: solution concept : present worth is calculated as the the present value of inflow less present…
Q: A small northern California consulting firm wants to start a recapitalization pool for replacement…
A: The future value of a growing annuity is the future worth of an annuity that is growing at a…
Q: Shine Co. is looking at expanding its business to include Bitcoin Mining, and change their name to…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: Straight-Line is a company that does land surveys and engineering consulting. They have an…
A: Break-even refers to the point at which the company has no profit/loss from the sale of a product or…
Q: A large electronic retailer is considering the purchase of software that will minimize…
A: Net present value (NPV) is a method for assessment of financial profitability of a project. NPV is…
Q: The Cox Computer Company has grown rapidly during the past Recently, its commercial bank urged the…
A:
Q: What is the payback period if a copy shop is thinking about buying a new copier with an initial…
A: The number of days needed to recover the cost of your investment is known as the repayment period.…
Q: Sensotech, Inc., a maker of microelectromechanical systems, believes it can reduce product recalls…
A: Given information: NPV of the project is $225,000 MARR is 15% Number of years of investment is 4…
Q: Franklin Mints, a confectioner, is considering purchasing a new jelly bean-making machine at a cost…
A: IRR(Internal Rate of Return) is the rate of discounting at which the present value of cash inflows…
Q: Johnson Hardware wants to construct a new building at a second location. If construction could begin…
A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: The Howe Computer Company has grown rapidly during thepast 5 years. Recently, its commercial bank…
A: “Hello. Since you have posted multiple questions and not specified which question needs to be…
Q: The article goes on to discuss a technology startup whose risk assessments signif- icantly reduce…
A: First Scenario: Loan Amount "Present Value" is $500 Amount paid back " Future Value" is $1500 Time…
Q: What is the payback period if a copy shop is thinking about buying a new copier with an initial…
A: Introduction: The payback period is the time required to recoup your capital investment. In layman's…
Q: Anderson Manufacturing Co., a small fabricatorof plastics, needs to purchase an extrusion…
A: First annual payment is determined using the following formula: Principal=Annual Payment of year…
Q: Turner Printing is looking to invest in a printer, which costs $60,000. Turner expects a 15% rate of…
A: Accounting Rate of Return (ARR) = Expected annual incremental income/ Initial Investment
Q: A firm might purchase a computerized quality control system. The proposed system will cost $76,000,…
A: DISCOUNTED PAYBACK PERIOD FORMULA: discounted payback period=period prior to full…
Q: Management of Carla Vista Mints, a confectioner, is considering purchasing a new jelly bean-making…
A: Capital budgeting is one of the processes used by businesses to assess major projects or investments…
Q: Sensotech, Inc., a maker of microelectromechanical systems, believes it can reduce product recalls…
A: MARR is return that an proposal must earn to qualify for investment. Investors or Manager have…
Q: A fashion label is considering inclusive sizing which would expand its offerings to plus size and…
A: The break-even no. of pieces will be that number for which the NPV is nil. NPV is net present value.
Q: A drug store is looking into the possibility of installing a “24/7” automated prescription refill…
A: Discounting is a technique through which PV of future amount is computed by consider appropriate…
Q: The garden supply company is also considering taking out a loan and buying a small truck to save…
A: Payback period is defined as the number of years required to recover the initial cost of the…
Q: A northern California consulting firm wants to start saving money for replacement of network…
A: The computation is done below: The amount available will be $26,751.81
Q: The International Parcel Service has installed a new radio frequency identification system to help…
A: The future worth analysis is the capital budgeting tool used to evaluate the acceptability of a…
Q: A fast food restaurant feels they could increase their profits by introducing ice cream. The…
A: Given: Year Particulars Amount 0 Initial investment -$250,000 1 Cash inflows $125,000 2…
Q: A drug store is looking into the possibility of installing a “24/7” automated prescription refill…
A: Given: Projected increase in revenues 20000 Expected annual costs 5000 Depreciation Method…
Q: What is the payback period if a copy shop is thinking about buying a new copier with an initial…
A: Introduction: The payback period is the amount of time it takes to recoup your investment costs. It…
Q: A drug store is looking into the possibility of installing a "24/7" automated prescription refill…
A: To grow, firm starts various new projects. Firm can do the business at least situation of not loss…
Q: ordon Corporation is considering the acquisition of a new machine that costs $149,040. The machine…
A: Given: Initial Investment = $149040 Number of years = 4 Annual savings = $45000
Q: A large electronic retailer is considering the purchase of software that will minimize shipping…
A: In the given situation, Purchase of Software has to be justified for the annual expenditure incurred…
Q: Johnson Hardware wants to construct a new building at a second location. If construction could begin…
A: Inflation rate = 3% Cost of New Building = $500,000 Down Payment required = 20% Monthly Investment =…
Q: Pearson International Publishing Company is trying to decie revise its popular textbook, Fundamental…
A: In this we have to find the net present value and check weather it is positive or negative.
Q: A computer call center is going to replace all of its incandescent lamps with more energy-efficient…
A: Part (a)The cash flows and IRR calculations are shown on the white board. Please see the white…
Q: BOYDZ Condiments is a spice-making firm. Recently, it developed a new process for producing spices.…
A: The discount factors are calculated as either the future or present value of one dollar amount for…
Q: Management of Sandhill Mints, a confectioner, is considering purchasing a new jelly bean-making…
A: Net present value is the present value of all cash flow in minus present value of cash flow out…
Q: A computer call center is going to replace all of its incandescent lamps with more energy efficient…
A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…
Q: A seaI firm Trodent’s customers expects to decrease downtime by 0.3 as a result of the new seal…
A: Annuity Factor:- It is simplifying the process of calculating the present value of cash flow and…
Portland Savings and Loan is considering new computer software, which, because of installation and training cost, will have an unusual pattern of net receipts. The expected receipts are: $20,000 in year 1, nothing in the next yea r, $30,000 in year 3, and $50,000 in year 4. At an interest rate of 6% what is the present value of these receipts? |
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
- Determine the NPV for the following: An information system will cost $95,000 to implement over aone-year period and will produce no savings during that year. When the system goes online, the companywill save $30,000 during the first year of operation. For the next four years, the savings will be$20,000 per year. Assuming a 12% discount rate, what is the NPV of the system?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?A seaI firm Trodent’s customers expects to decrease downtime by 0.3 as a result of the new seal design. If Iost production would have cost the company $110,000 per year for the next four years, how much could the company afford to spend now on the new seals, if it uses an interest rate of 0,1 2 per year?
- Johnson Electronics is considering extending trade credit to some customers previously considered poor risks. Sales would increase by $270,000 if credit is extended to these new customers. Of the new accounts receivable generated, 9 percent will prove to be uncollectible. Additional collection costs will be 6 percent of sales, and production and selling costs will be 75 percent of sales. 1. Compute the incremental income before taxes. 2. What will the firm’s incremental return on sales be if these new credit customers are accepted? (Round final answer to 2 decimals) 3. If the receivable turnover ratio is 5 to 1, and no other asset buildup is needed to serve the new customers, what will Johnson Electronics’ incremental return on new average investment be? (Round only the final answer to %)Sunny Manufacturing is considering extending trade credit to some customers previously considered poor risks. Sales would increase by $220,000 if credit is extended to these new customers. Of the new accounts receivable generated, 10 percent will prove to be uncollectible. Additional collection costs will be 5 percent of sales, and production and selling costs will be 70 percent of sales. a. Compute the incremental income before taxes. $ Incremental income before taxes b. What will the firm's incremental return on sales be if these new credit customers are accepted? (Round the final answer to 2 decimal place.) Incremental return on sales % c. If the receivable turnover ratio is 4 to 1, and no other asset buildup is needed to serve the new customers, what will Sunny Manufacturing's incremental return on new average investment be? (Do round intermediate calculations. Round the final answer to the nearest whole percentage.) Incremental return on new average investment %Proposal #1 would extend trade credit to some customers that previously have been denied credit because they were considered poor risks. Sales are projected to increase by $200,000 per year if credit is extended to these new customers. Of the new accounts receivable generated, 7% are projected to be uncollectible. Additional collection costs are projected to be 3% of incremental sales (whether they actually end up collected or not), and production and selling costs are projected to be 80% of sales. Your firm expects to pay a total of 40% of its income after expenses in taxes. 1.Compute the incremental income after taxes that would result from these projections: 2.Compute the incremental Return on Sales if these new credit customers are accepted: If the receivable turnover ratio is expected to be 4 to 1 and no other asset buildup is needed to serve the new customers… 3.Compute the additional investment in Accounts Receivable 4.Compute the incremental Return on New Investment…
- Skyline Industries will need $2.2 million in 4.5 years from now to replace some equipment. Currently, the firm has some extra cash and would like to establish a savings account for this purpose. The account pays 3.6 percent interest, compounded annually. How much money must the company deposit to fully fund the equipment purchase? Can the calculator and excel solution be provided?Your company is considering granting credit to a new customer. The variable cost per unit is RO 20, the current price is RO 25, and the monthly required return is 2.5%. What is the break - even probability of default if we assume a repeat business? Interpret.You are considering an investment manufacturing cocoa powder. This investment needs $185,000 today and expects to repay you $200,000 in a year from now. What is the IRR of this investment opportunity? Given the riskiness of the investment opportunity, your discount rate is 11%. What does the IRR rule say about whether you should invest? a. The IRR is 7.5%. The IRR rule says that you should not invest. b. The IRR is 8.11%. The IRR rule says that you should not invest. c. The IRR is 1.2%. The IRR rule says that you should not invest. d. The IRR is 16.8%. The IRR rule says that you should invest.
- 3. Calculate the internal rate of return for a machine that costs $550,000 and provides annual revenue of $125,000 per year for 5 years. You can assume all revenue is received once a year at the end of the year. a. Compare the IRR to the interest rate on a loan to fund the machine cost at 5.3%. Based on this information should you take on a loan to purchase this machine. Justify your answer.A large electronic retailer is considering the purchase of software that will minimize shippingexpenses in its supply chain network. This software, including installation and training, wouldbe a RM10-million investment for the retailer.Calculate how much annual savings in shipping expenses must there be to justify the purchaseof the software if the firm’s effective interest rate is 15% per year and the life of the softwareis four yearThe International Parcel Service has installed a new radio frequency identification system to help reduce the number of packages that are incorrectly delivered. The capital investment in the system is $65,000, and the projected annual savings are tabled below. The system’s market value at the EOY five is negligible, and the MARR is 18% per year. Solve, a. What is the FW of this investment? b. What is the IRR of the system? c. What is the discounted payback period for this investment?