The Sweetwater Candy Company would like to buy a new machine that would automatically "dip" chocolates.The dipping operation is currently done largely by hand. The machine the company is considering costs$240,000. The manufacturer estimates that the machine would be usable for five years but would require thereplacement of several key parts at the end of the third year. These parts would cost $11,600, includinginstallation. After five years, the machine could be sold for $5,000.The company estimates that the cost to operate the machine will be $9,600 per year. The present methodof dipping chocolates costs $56,000 per year. In addition to reducing costs, the new machine will increaseproduction by 3,000 boxes of chocolates per year. The company realizes a contribution margin of $1.80 perbox. A 13% rate of return is required on all investments.Use Excel or spreadsheet to solve. Round answers to the nearest dollar.Required:1. What are the annual net cash inflows that will be provided by the new dipping machine?Reduction in annual operating costs:Operating costs, present hand methodOperating costs, new machineAnnual savings in operating costsIncreased annual contribution marginTotal annual net cash inflovws2$2. Compute the new machine's net present value. (Any cash outflows should be indicated by a minussign. Round final answers to the nearest whole dollar amount.)Now234Purchase of machineAnnual net cash inflowsReplacement partsSalvage value of machineTotal cash flows$2$2$이 $이 $이 $Net present value

1: Computation of net annual cash inflows by new dipping machine - Sweetwater Candy Company…

1. What are the annual net cash inflows that will be provided by the new dipping machine? Reduction in annual operating costs: Operating costs, present hand method Operating costs, new machine Annual savings in operating costs Increased annual contribution margin Total annual net cash inflows 2. Compute the new machine's net present value. (Any cash outflows should be indicated by a minus

1. What are the annual net cash inflows that will be provided by the new dipping machine? Reduction in annual operating costs: Operating costs, present hand method Operating costs, new machine Annual savings in operating costs Increased annual contribution margin Total annual net cash inflows 2. Compute the new machine's net present value. (Any cash outflows should be indicated by a minus

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

For project A, the cash flow effect from the change in net working capital is expected to be $490.00 at time 2 and the level of net working capital is expected to be $750.00 at time 1. What is the level of current assets for project A expected to be at time 2 if the level of current liabilities for project A is expected to be $2,600.00 at time 2? $2,860.00 (plus or minus $10) $3,840.00 (plus or minus $10) $1,360.00 (plus or minus $10) $2,340.00 (plus or minus $10) None of the above is within $10 of the correct answer
Use the table for the question(s) below. Consider the following two projects: Year 0 Project Cash Flow A - 100 40 50 B - 73 30 30 The payback period for project A is closest to: OA. 2.0 years O B. 2.4 years C. 2.2 years O D. 2.5 years Year 1 Cash Flow Year 2 Cash Flow Year 3 Cash Flow 60 30 Year 4 Cash Flow N/A 30 Discount Rate .15 .15
You are given the following cash flow for a project, and told that PW(8%) = $8,300 for this project. What is the value of the unknown payment X for the second and third periods? n Cash Flow 0 -$36,000 1 $0 2 $X 3 $X O Cannot be determined. O $24,842.08 O $26,829.44 O $5,026.74
Find the present worth at time 0 of the chrome plating costs shown in the cash flow diagram. Assume i = 10% per year.
Compute the internal rate of return for the cash flows of the following two projects. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Year Project A 0 -$13,800 Project B -$ 11,400 1 5,400 2,900 2 6,200 8,500 3 5,000 4,600 Project A Project B % %
If you are compounding a cash flow, you are ________. A: Finding a future value B: Finding a present value C: Multiplying a future cash flow by the number of years it is from the present D: None of the abov
Required information [The following information applies to the questions displayed below.] Kate's Candy Corporation makes chewy chocolate candies at a plant in Winston-Salem, North Carolina. Steve Bishop, the production manager at this facility, installed a packaging machine last year at a cost of $600,000. This machine is expected to last for 10 more years with no residual value. Operating costs for the projected levels of production, before depreciation, are $120,000 annually. Steve has just learned of a new packaging machine that would work much more efficiently in the production line. This machine would cost $696,000 installed, but the annual operating costs would be only $48,000 before depreciation. This machine would be depreciated over 10 years with no residual value. He could sell the current packaging machine this year for $300,000. Steve has worked for Kate's Candy for 7 years. He plans to remain with the firm for about 2 more years, when he expects to become a vice president…
Joetz Corporation has gathered the following data on a proposed investment project (Ignore income taxes.): Investment required in equipment Annual cash inflows Salvage value of equipment Life of the investment Required rate of return Multiple Choice The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using the tables provided. The internal rate of return of the investment is closest to: O O O 27% 25% 23% $37,000 $ 8,800 $ 21% 0 15 years 10 %
Mendez Company has identified an investment project with the following cash flows. Year Cash Flow 1 $ 1,150 2 1,030 3 1,520 4 1,880 If the discount rate is 11 percent, what is the present value of these cash flows? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. What is the present value at 16 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. What is the present value at 22 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
Average Rate of Return, Cash Payback Period, Net Present Value Method for a Service Company Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost of $176,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of $44,000. The company's minimum desired rate of return for net present value analysis is 12%. Present Value of an Annuity of $1 at Compound Interest 15% Year 6% 10% 12% 20% 1 0.943 0.909 0.893 0.870 0.833 1.736 2 1.833 1.690 1.626 1.528 2.673 2.283 2.487 2.402 2.106 4 3.465 3.170 3.037 2.855 2.589 3.605 3.353 5 4.212 3.791 2.991 3.785 4.917 4.355 4.111 3.326 3.605 7 5.582 4.868 4.564 4.160 6.210 4.968 4.487 3.837 8 5.335 6.802 5.759 5.328 4.772 4.031 6.145 5.650 5.019 10 7.360 4.192 Compute the following:
A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year 0 Cash Flow -$ 27,800 1 11,800 -23 3 14,800 10,800 If the required return is 18 percent, what is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) IRR %
For project A, the cash flow effect from the change in net working capital is expected to be $480.00 at time 2 and the level of net working capital is expected to be $750.00 at time 1. What is the level of current assets for project A expected to be at time 2 if the level of current liabilities for project A is expected to be $2,580.00 at time 2? $2,310.00 (plus or minus $10) $3,810.00 (plus or minus $10) $1,350.00 (plus or minus $10) $2,850.00 (plus or minus $10) None of the above is within $10 of the correct answer