What is the accounting rate of return on the original cost of investment (ARROC)?
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The accounting
a. 9.1%
b. 9.3%
c. 9.6%
d. 9.9%
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- 1. Determine the B/C ratio for the following project. First Cost P100, 000 Project life, years 5 Salvage value P10, 000 Annual benefits P60, 000 Annual O and M P22, 000 Interest rate, % 15 Ans: B/C = 1.16A project is estimated to cost P120T, last 8 years & have a salvage value of P20T. The annual gross income is expected to average P50k & annual expenses is P5T. If capital is earning 10% determine if this is a desirable investment using annual cost method, what is the net cost. : a. 24,255.598 b. P24,756.951 c. 25,245.598 d. P27,535.412Compute the benefit cost ratio of the following project: Project cost = P80 000 Gross Income = P25000/year %3D Operating Cost = P6000/year Salvage value = 0 Life of project = 10 years %3D Rate of interest = 12%
- The tabular information of a certain engineering project is shown below: REVENUE AND COST ESTIMATES Capital investment Annual revenue Annual operating cost Salvage value Study period BD 60,000 BD 25,000 BD 9,000 BD 20,000 MARR 20% Evaluate the project using Present Worth (PW) methodGiven the following project alternatives, determine the most economical investment given an MARR of 10% using IRR method. Project A B C D 6.12% -2.8067% -3.394% 2699% Investment 13.69% $ 100,000 $ Annual Profit Useful Life Salvage Value $ 140,500 $ 148,200 $ 27,500 38,600 38,500 $ 98,000 $ 22,100 What is the incremental IRR of the second comparison? 5 5 5 5 $ 10,000 $ $ 14,000 25,600 14,000What is the annual equivalent worth of a project where (a) the initial investment is $50,000; (b) will have revenues of $8,000 per year; (c) annual cost of operation and maintenance of $1,200 and (d) a residual or salvage value of $2,000 after 15 years? Assume rate of return is 8%. A. $-41,200 B. $13,438 C. $6,800 D. $288 E. -$712 F. $3,600
- Determine the B/C ratio for the following project. First Cost P100, 000 Project life, years 5 Salvage value P10, 000 Annual benefits Р60, 000 Annual O and M Р22, 000 Interest rate, % 1557. An asset was purchased for P66,000. The asset is expected to last for 6 years and will have a salvage value of P16,000. The company expects the income before tax to be P7,200 and the tax rate of the company is 30%. What is the average return on investment (accounting rate of return)? Group of answer choices 17.6% 10.9% 12.3% 7.6%A company is considering a 3-year project with a projected net income of sh. 4M, 6M,5M in year 1, year 2 and year 3 respectively. The initial investment is sh. 40M and the salvage value is sh.2M.The company applies the straight line method for depreciating its assets, what is the Accounting Rate of Return? Assume a tax rate of 30% Select one: A. 26.3% B. 23.8% C.25% D. None of the above
- Consider the financial data for a project given in the table below. Initial investment Project life Salvage value Annual revenue $70,000 6 years $10,000 $26,000 Annual expenses $7,000 (a) What is i for this project? 18.1 % (Round to one decimal place.) (b) If the annual expense increases at a 7% rate over the previous year's expenses, but the annual income is unchanged, what is the new / - 16 % (Round to one decimal place.) (c) In part (b), at what annual rate will the annual income have to increase to maintain the same i obtained in part (a)? The annual income has to increase at% per year (Round to one decimal place.)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?A machine has a first cost of P800,000 and a salvage value of P50,000 at the end of its life after 10 years. The annual saving for the use of the machine amount s to P124,900.97. If the annual maintenance of the machine is P4000 and the sinking fund to recover depreciation earns 6%, compute for the rate of return of investment. Answer: 8%