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Latest Questions & Answers | Course Eagle a. A company is investing in a solar panel system to reduce its electricity costs. If a potential investments internal rate of return is above the companys hurdle rate, should the investment be made? $2,000 per year for 10 years is the equivalent of $12,835 today ($2,000 6.4177) The investment costs $45,000 and has an estimated $6,000 salvage value. If the accounting ra, A company buys a machine for $76,000 that has an expected life of 7 years and no salvage value. TABLE B.3 Present Value of an Annuity of 1 Rat Periods 1% 2% 4% 5% 6% 7% 5% 10% 12% 15% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 1.9704 1.9416 1.9135 1.88611.8594 1.8334 8080 1.7833 1.759 .7355 16901 1.6257 2.9410 2.8839 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 2.2832 3.9020 3.8077 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 2.8550 3.9927 3.8897 3.7908 3.6048 3.3522 5.7955 5.6014 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 3.7845 5.3893 5.2064 5.0330 4.8684 4.5638 4.1604 7.6517 7.3255 7.0197 6.73276.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 4.4873 8.5660 8.1622 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7590 5.3282 4.7716 9.4713 8.9826 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502 5.0188 7.1390 6.8052 6.4951 5.93775.2337 11.255 10.5753 9.95409.3851 8.8633 8.3838 7.9427 7.5361 7.1607 6.8137 6.1944 5.4206 12.1337 11.3484 10.6350 9.9856 9.3936 8.8527 8.3577 7.9038 7.4869 7.1034 6.4235 5.5831 13.0037 12.1062 11.2961 10.5631 9.8986 9.2950 8.7455 8.2442 7.7862 7.3667 6.6282 5.7245 13.8651 .8493 11.9379 11.1184 10.3797 9.7122 9.1079 8.5595 8.0607 7.6061 6.8109 5.8474 14.7179 13.5777 12.5611 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 6.9740 5.9542 15.5623 14.2919 13.1661 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.1196 6.0472 16.3983 14.9920 13.7535 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.2497 6.1280 17.2260 15.6785 14.3238 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 7.3658 6.1982 18.0456 16.3514 14.8775 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.4694 6.2593 22.0232 19.5235 17.4131 15.6221 14.0939 12.7834 11.6536 10.6748 9.8226 9.0770 7.8431 6.4641 25.8077 22.3965 19.6004 17.2920 5.3725 13.7648 12.4090 11.2578 10.2737 9.4269 8.0552 6.5660 29.4086 24.9986 21.4872 18.6646 16.3742 14.4982 12.9477 11.6546 10.5668 9.6442 8.1755 6.6166 32.8347 27.3555 23.1148 19.7928 17.1591 15.0463 13.3317 11.9246 10.7574 9.7791 8.2438 6.6418 4.8534 4.7135 4.57974.4518 4.3295 4.2124 4.1002 6.7282 6.4720 6.2303 6.0021 5.7864 5.5824 10.3676 9.7868 26 8.7605 8.3064 7.8869 7.4987 12 13 14 15 16 19 20 25 30 35 40 Used to calculate the present value of a series of equal payments made at the end of each period. Administrative Sciences | Free Full-Text | Firm Characteristics Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The, Shep Corp. is considering a 20-year investment with a net present value of cash flows of -$20,800 and an uncertain salvage value. View some examples on NPV. The payback period, You are considering investing in a start up company. 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. Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. Depreciation is calculated using the straight-line method. The net cash flows are estimated to be $7,610 per year for the next 5 years and no salvage value is anticipated. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. Assume the company uses straight-line depreciation. The fair value of the equipment is $464,000. The investment costs $45,000 and has an estimated $6,000 salvage value. The machine will generate annual cash flows of $21,000 for the next three years. Assume the company uses You have the following information on a potential investment. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses st, A machine costs $700,000 and is expected to yield an after-tax net income of $30,000 each year. A company buys a machine for $76,000 that has an expected life of 6 years and no salvage value. The machine will cost $1,780,000 and is expected to produce a $195,000 after-tax net income to be re, A company can buy a machine that is expected to have a three-year life and a $33,000 salvage value. The building is expected to generate net cash inflows of $15,000 per year for the next 30 years. Currently, U.S. Treasury bills are yielding 6.75% and the expected return for the S & P 500 is 18.2%. 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. The company anticipates a yearly net income of $3,800 after taxes of 16%, with the cash flows to be received evenly throughout each year. X Sweden, Denmark and Norway, encounter several regulations and initiatives considering CSR and SRI such as the European Green Deal. The investment costs $59.100 and has an estimated $6.900 salvage value. Furthermore, the implication of strategic orientation for . 94% of StudySmarter users get better grades. The equipment has a useful life of 5 years and a residual value of $60,000. Assume Peng requires a 5% return on its investments. Answer is complete but user contributions licensed under cc by-sa 4.0, Peng Company is considering an investment expected to generate an average net income after taxes of $2,500 for three years. What rate of return should you expect for your investment in Fir, If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment, which method would the investor normally use to account for this investment? d) Provides an, Dango Corporation is reviewing an investment proposal. Compute the accounting rate of return for this investment assume the company uses straight-line depreciation BOOK Accounting Rate of Return Choose Denominator: Choose Numerator = = Accounting Rate of Return Accounting rate of retum Print teferences. How to Calculate Net Present Value: Definition, Formula & Analysis For example: What is the future value of $4,000 per ye ar for 6 years assuming an annual interest rate of 8%. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. earnings equal sales minus the cost of sales The project is expected to have an after-tax return of $250,000 in each of years 1 and 2. Assume the company uses straight-line depreciation. Required: Prepare the, X Company is thinking about adding a new product line. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The product line is estimated to generate cash inflows of $300,000 the first year, $250,000 the second year, and $200,000 each year thereafter for ten more years. Assume the company uses straight-line . value. and EVA of S1) (Use appropriate factor(s) from the tables provided. , e following two costs of production, respectively: (1) the paper; and (2) the authors' one-time fees. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. c) 6.65%. To make this happen, the firm, Wilcox Company is considering an investment that will generate cash revenues of $120,000 per year for 8 years, and have cash expenses of $60,000 per year for 8 years. Good estimates are available for the initial investment and the a, Pito Company has been in operation for several years. Riverside: A private equity acquisition - academia.edu The investment costs $45,600 and has an estimated $8,700 salvage value. The current value of the building is estimated to be $120,000. The investment costs $45,600 and has an estimated $8,700 salvage value. If the weighted average cost of capital is 10% and the cost of equity is 15%, what is the horizon value, to the ne, Management of a firm with a cost of capital of 12 percent is considering a $100,000 investment with annual cash flow of $44,524 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. 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.] 1, A machine costs $180,000 and will have an eight-year life, a $20,000 salvage value, and straight-line depreciation is used. 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. 2003-2023 Chegg Inc. All rights reserved. The investment costs $45,000 and has an estimated $6,000 salvage value. The present value of an annuity due for five years is 6.109. Which of, Fraser Company will need a new warehouse in eight years. c. Retained earnings. The average stock currently returns 15% and short-term treasury bills are offering 6%. The machine will cost $1,812,000 and is expected to produce a $203,000 after-tax net income to be re, A company can buy a machine that is expected to have a three-year life and a $23,000 salvage value. Determine the payout period in year. The investment costs $56,100 and has an estimated $7,500 salvage value. The investment costs $51,900 and has an estimated $10,800 salvage value. Using the orig, A building has a cost of $500,000 and accumulated depreciation of $40,000. (PV of. The investment costs $45,600 and has an estimated $8,700 salvage value. Projected annual cash flows are: Year 1 $500,000 Year 2 $600,000 Year 3 $700,000 Year 4 $400,000 Calculate the NPV and the IRR. Peng Company is considering an investment expected to generate an average net income after taxes of $3,200 for three years. What is the present valu, Strauss Corporation is making an $85,200 investment in equipment with a 5-year life. 2003-2023 Chegg Inc. All rights reserved. What are the appropriate labels for classifying the relationship between this cost item and th Peng Company is considering an investment expected to genera | Quizlet (FV of $1, PV of $1, FVA of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) Peng Company is considering an investment expected to generate an average net income after taxes of $2,000 for three years. (before depreciation and tax) $90,000 Depreciation p.a. 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. Experts are tested by Chegg as specialists in their subject area. What is the internal rate of return if the company buys this machine? Solution: Annual depreciation = (Cost - Salvage value) / useful life = ($45,600 - $8,700) / 3 = $12,300 Annual cash i. All other trademarks and copyrights are the property of their respective owners. Assume Peng requires a 10% return on its investments. Annual savings in cash operating costs are expected to total $200,000. Createyouraccount. Fair value method c. Historical cost m, Blue Fin Inc. requires all capital investments to generate a minimum internal rate of return of 15%. Required information [The following information applies to the questions displayed below.) 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 $1,950 for three years. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. The investment costs $45,300 and has an estimated $7,500 salvage value. The following information applies to // Header code for stack // requesting to create source code 200,000. All rights reserved. The machine will cost $1,796,000 and is expected to produce a $199,000 after-tax net income to be received at the end of each year. Peng Company is considering an investment expected to generate an average net income after taxes of $2,700 for three years. What is the most that the company would be willing to invest in this project? The payback period for this investment is: a) 3.9 years b) 3 years, Hung Company accumulates the following data concerning a proposed capital investment: cash cost of $216, 236, net annual cash flows of $43,800, and present value factor of cash inflows for 10 years 5.22 (rounded). Peng Company is considering an Investment expected to generate an average net income after taxes of $3,000 for three years. Compute the net present value of this investment. (1) Determine wheth, Dartis Company is considering investing in a specialized equipment costing $600,000. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. the net present value of this investment. The Longlife Insurance Company has a beta of 0.8. The investment is expected to return the following cash flows, discounts at 8%. The payback period f. Elmdale Company is considering an investment that will return a lump sum of $743,100, 7 years from now. It is considering investing in a project that costs $210,000 and is expected to generate cash inflows of $85,000 at the end of each year for 4 years. Yearly depreciation = (56,100 - 7,500) / 3 = $16,200.00. The company anticipates a yearly after-tax net income of $1,805. Compute. The investment costs $48,600 and has an estimated $6,300 salvage value. At the beginning of 2007, the company has a deferred tax asset of $360 pertain, Your company has been presented with an opportunity to invest in a project that is summarized as follows: Investment required $60,000,000 Annual gross income $14,000,000 Annual operating Costs 5,500,000 Salvage Value after 10 years 0 The project is expec, 1. Securities Cost Fair Value Trading 120,000 124,000 Non-trading 100,000 94,000 The non-trading securities are held as long-term investments. investment costs $51,600 and has an estimated $10,800 salvage The lease term is five years. ), Exercise 26-11 BAP Corporation is reviewing an investment proposal. Compute the net present value of this investment. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The net income after the tax and depreciation is expected to be P23M per year. The company uses straight-line depreciation. Peng Company is considering an investment expected to generate an Each investment costs $480. Q: Peng Company is considering an investment expected to generate an average net. Assume the company requires a 12% rate of return on its investments. a. Compute Loon s taxable inco. 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. Coins can be redeemed for fabulous The investment costs $48,000 and has an estimated $10,200 salvage value. (20-year, 12% pr, What is the NPV and IRR for the two investments options below? Assume Peng requires a 5% return on its investments. Createyouraccount. The annual depreciation cost is 10% of fixed capital investment. If the value of leased asset is $125 and the cost of debt is 10%, what is the, The cost of capital for a firm is 10 percent. Goodwill. The initial cost and estimates of the book value of the investment at the end of the year, the net cash flows for each year, and the net income, Crane Company is considering an investment that will return a lump sum of $898, 900, 6 years from now. Input the cash flow values by pressing the CF button. (Round answer to, During the year, Loon Corporation has the following transactions: $400,000 operating income; $325,000 operating expenses; $25,000 municipal bond interest; $60,000 long-term capital gain; and $95,000 short-term capital loss. Select chart Assu, Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. Management predicts this machine has a 8-year service life and a $100,000 salvage value, and it uses str, Carla Company owns equipment that cost $1,044,000 and has accumulated depreciation of $440,800. Get access to this video and our entire Q&A library, How to Calculate Net Present Value: Definition, Formula & Analysis. Compute the net present value of this investment. The investment costs $45,000 and has an estimated $6,000 salvage value. c) Only applies to a business organized as corporations. After inputting the value, press enter and the arrow facing a downward direction. Peng Company is considering an investment expected to generate an copyright 2003-2023 Homework.Study.com. 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. Assume Peng requires a 5% return on its investments. Compute the net present value of this investment. Accounting Rate of Return Choose Denominator: Choose Numerator: T = Accounting Rate of Return = Accounting rate of return 0, Required Information [The following information applies to the questions displayed below) Peng Company is considering an investment expected to generate an average net income after taxes of $1950 for three years. Assume Peng requires a 15% return on its investments. They first apply the real options approach to assess the investment values as well as the distribution of energies such as biomass, coal, natural . 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! Amount x PV Factor = Present Value Cash Flow Annual cash flow Select Chart Present Value of an Annuity of 1 II Residual value II Net present value. The net present value of the investment is $-1,341.55. There is a 77 percent chance that an airline passenger will Peng Company is considering an investment expected to generate an average net income after taxes of $2,500 for three years. Management predicts this machine has an 11-year service life and a $60,000 salvage value, and it uses straight-line depreciation. Assume Peng requires a 10% return on its investments. The salvage value of the asset is expected to be $0. Using the original cost of the asset, what will be the unadjusted rat, A company can buy a machine that is expected to have a three-year life and a $31,000 salvage value. What is the depreciation expense for year two using the straight-line method? What is Roni, You are considering an investment in First Allegiance Corp. Peng Company is considering an investment expected to generate an average net income after taxes of $2,600 for three years. The asset has no salvage value. Assume Peng requires a 15% return on its investments. Babirusa Company is considering the following investment: Initial capital investment $175,000 Estimated useful life 3 years Estimated disposal value in 3 years $25,000 Estimated annual savings in cas, Sunset Inc. is trying to determine if they should invest in a new machine that would be more efficient and would generate an annual profit of $100,000 (after tax). The company's required rate of return is 12 percent. It expects to generate $2 million in net earnings after taxes in the coming year. a. QS 24-8 Net present value LO P3 Assume Peng requires a 15% return on its investments. These assets contribute $28,000 to annual net income when depreciation is computed on a straight-line basis. (For calc, Natt Company is considering undertaking a project that would yield annual profits (after depreciation) of $68,000 for 5 years. What lump-sum amount should the company invest now to have the $370,000 available at the end of the eight-year period? Assume Peng requires a 5% return on its investments. Generation planning for power companies with hybrid production , ided by total investment.. total investment is current assets (inventories, accounts receivables and cash) plus fixed assets. Trading securities (fair value) = $70,000 Available-for-sale securities (fair value) = $40,000 Held-to-maturity securities (amortized cost) = $47,000 At what amount will Ahnen report investments in its current, A company is contemplating investing in a new piece of manufacturing machinery. Required information [The following information applies to the questions displayed below.) The company uses straight-line depreciation. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Compute the net present value of this investment. What is the present valu, Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. Solved Peng Company is considering an investment expected to - Chegg The investment costs $54,000 and has an estimated $7,200 salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Assume the company uses straight-line depreciation. If a table of present v, Grouper Company owns equipment that cost $1,044,000 and has accumulated depreciation of $440,800. The expected future net cash flows from the use of the asset are expected to be $580,000. Note: NPV is always a sensitive problem bec. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. 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. 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. 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 project would require a $28,000 initial investment and has a salvage value of $2,000, A company has a minimum required rate of return of 9%. 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). Peng Company is considering an investment expected to generate an 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. True, Richol Corp. is considering an investment in new equipment costing $180,000. Assume Pang requires a 5% return on its investments. It gives us the profitability and desirability to undertake the project at our required rate of return. TABLE B.1 Present Value of 1 Rate Perlods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.7972 0.7561 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 08163 .793 0.7722 7513 7118 06575 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 0.5718 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 0.4972 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 0.4323 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 0.3759 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 0.3269 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 0.2843 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220 0.2472 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.2875 0.2149 0.8874 0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2567 0.1869 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2292 0.1625 0.8700 0.7579 0.6611 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2046 0.1413 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.1827 0.1229 0.8528 0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1631 0.1069 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1456 0.0929 0.8360 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1300 0.0808 0.8277 0.6864 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1161 0.0703 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1037 0.0611 0.7798 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0588 0.0304 0.7419 0.5521 0.4120 0.3083 0.2314 0.174 0.1314 0.0994 0.0754 0.0573 0.0334 0.0151 0.7059 0.5000 0.3554 0.2534 0.1813 0.1301 0.0937 0.0676 0.0490 0.0356 0.0189 0.0075 0.6717 0.4529 0.3066 0.2083 0.1420 0.0972 0.0668 0.0460 0.0318 0.0221 0.0107 0.0037 9 10 12 13 14 15 16 18 19 20 25 30 35 40 * Used to compute the present value of a known future amount.