The following relates to a proposed equipment purchase: Cost $126,900 Salvage value Estimated useful life 3,100 4 years Annual net cash flows $ 45,200 Straight-line Depreciation method The annual average investment amount used to calculate the accounting rate of return is:
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- The following data pertain to an investment proposal: Cost of investment Annual cost savings Estimated salvage value Expected life of investment $45,000 $10,000 $0 5 years 10% Discount rate What is the present value of the proposed investment?The following information Company: available for a potential investment for Rose Initial investment P80,000 Net annual cash inflow 20,000 Net present value 36,224 Salvage value 10,000 Useful life 10 yrs. The potential investment's profitability index is A. 2.50 B. 2.85 C. 4.00 D. 1.45A firm has projected the following financials for a possible project: YEAR Sales Cost of Goods S&A Depreciation Investment in NWC Investment in Gross PPE 0 1,130.00 105,468.00 1 132,716.00 Submit 549.00 2 62,780.00 62,780.00 30,000.00 30,000.00 30,000.00 21,093.60 21,093.60 21,093.60 Answer format: Currency: Round to: 2 decimal places. 3 132,716.00 132,716.00 132,716.00 549.00 What is the NPV of the project? (Hint: Be careful about rounding the WACC here!) 4 62,780,00 62,780.00 62,780.00 30,000.00 549.00 21,093.60 549.00 5 132,716.00 The firm has a capital structure of 37.00% debt and 63.00% equity. The cost of debt is 9.00%, while the cost of equity is estimated at 15.00%. The tax rate facing the firm is 38.00%. (Assume that you can't recover the final NWC position in year 5. i.e. only consider the change in NWC for each year) 30,000.00 21,093.60 549.00
- Redwood Corporation is considering two alternative investment proposals with the following data: Proposal X Proposal Y Investment $840,000 $466,000 Useful life 9 years 9 years Estimated annual net cash inflows for 9 years $145,000 $52,000 Residual value $33,000 $− Depreciation method Straight−line Straight−line Required rate of return 19% 6% What is the accounting rate of return for Proposal X?Tiberius Manufacturing is considering two alternative investment proposals with the following data: Proposal X Proposal Y $10,500,000 Investment $500,000 Useful life Estimated annual net cash inflows for 5 years Residual value 5 years $2,100,000 5 years $105,000 $32.000 $52.000 Depreciation method Required rate of return Straight-line Straight-line 13% 12% Calculate the accounting rate of return for Proposal Y. (Round any intermediate calculations and your final answer to two decimal places.) A. 12.63% B. 9,52% C. 13.87% D. 4.29%METHODS THAT CONSIDER TIME VALUE OF MONEY Two investment proposals have been made and the following data thereon are given: Project ALPHA Project BETA Investment P123,417 P155,934 Depreciable assets included in the investment figure 60,000 72,000 Economic life 8 years 12 years Annual sales revenue P65,000 P78,000 Annual out-of-pocket operating cost 36,000 42,500 Income tax rate 35% Cost of capital 10% Determine which proposal is the better one based on: a. Internal rate of return b. Net present value c. Profitability index d. Discounted payback period
- The Post Company is considering investing in two alternative projects: Investment Useful life (years) Estimated annual net cash inflows for useful life Residual value Depreciation method Required rate of return What is the accounting rate of return for Project 1? OA. 52.5% B. 20% OC. 30% OD. 7.5% Project 1 $200,000 4 $60,000 $20,000 Straight-line 15% Project 2 $260,000 8 $45,000 $16,000 Straight-line 10%The following information is available for a potential investment for Panda Company: $110000 Initial investment Net annual cash inflow Net present value Salvage value Useful life 20000 O 5.50. O 2.49. O 3.55. O 1.40. 44150 10000 10 years The potential investment's profitability index isOsler Company is considering an investment with the following data: Initial cost $200,000 Annual net cash inflows $25,000 Expected life 10 years Salvage value none Depreciation will be taken on a straight-line basis over the expected life of the investment.What is the accounting rate of return for the investment? a.12.5% b.2.5% c.20% d.25% e.10%
- Using the provided information calculate the NPV Mkhize Ltd is considering buying a machine and has presented the following information; Purchase price Expected economic life Minimum required rate of return Net cash inflows Rate of taxation Depreciation is calculated using the straight-line method A. Positive R12,883 B. Negative R9,086 OC. Positive R10,089 OD. Negative R988 R130 000 10 years 12% R25000 30%Juniper Corporation is considering two alternative investment proposals with the following data: Proposal X Proposal Y Investment $810,000 $466,000 Useful life 8 years 8 years Estimated annual net cash inflows for 8 years $130,000 $70,000 Residual value $58,000 $− Depreciation method Straight−line Straight−line Required rate of return 13% 10% What is the accounting rate of return for Proposal X? (Round any intermediary calculations to the nearest dollar, and round your final answer to the nearest hundredth of a percent, X.XX%.)Welch Corporation is planning an investment with the following characteristics (Ignore income taxes.): Useful life 11 years Yearly net cash inflow $40,000 Salvage value $ Internal rate of return 13% Required rate of return 9% Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. The initial cost of the equipment is closest to: