2. Pigafetta made a PP1,000,000.00 investment in an endeavor whereby he manufactures products that are easily sold at P5,000.00 per unit. Per computation, the Payback Period is just two (2) years. If the total cost incurred by his company during a year is P2,100,000.00, a) What do you think is the number of products that his company was able to sell during the year? b) If his target is to attain a 15% Rate of Return, do you think that Pigafets has achieved his goal? Why?

2. Pigafetta made a PP1,000,000.00 investment in an endeavor whereby he manufactures products that are easily sold at P5,000.00 per unit. Per computation, the Payback Period is just two (2) years. If the total cost incurred by his company during a year is P2,100,000.00, a) What do you think is the number of products that his company was able to sell during the year? b) If his target is to attain a 15% Rate of Return, do you think that Pigafets has achieved his goal? Why?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Mike made $10,000 investment in an endorser whereby he manufactures products that are easily sold at $50 per unit. Per computation, the payback period is 2 years. If the total cost incurred by the company during a year is $21,000 a) What is the no. of products that the company was able to sell during the year? b) If his target is to attain a 15% Rate of Return, do you think he has achieved his goal? Why?
You are considering two types of machines fora manufacturing process.◼◼ Machine A has a first cost of $75,200, and itssalvage value at the end of six years of estimatedservice life is $21,000. The operating costs ofthis machine are estimated to be $6,800 per year.Extra income taxes are estimated at $2,400 peryear.◼◼ Machine B has a first cost of $44,000, and itssalvage value at the end of six years’ service isestimated to be negligible. The annual operatingcosts will be $11,500.Compare these two mutually exclusive alternativesby the present-worth method at i = 13%
You are analyzing a property that popped up on CREXI. Real estate taxes and management services cost 42,362 and 31,563, respectfully. Other expenses are 15,369. If your company’s required return is 10%, what must the average annual rent be over the next five years for you to purchase the property at $400,000 and obtain that 10%? Expenses grow at 2.5% per year. A. 189,500 B. 198,400 C. 201,300 D. 192,700 E. 209,500
Hello. Need help with the solution to question. Calculate the annual straight-line depreciation for a machine that costs $30,000 and has installation and shipping costs that total $2,000. The machine will be depreciated over a period of 15 years. The company’s marginal tax rate is 40 percent. Round your answer to the nearest dollar.
Do both Q.
4.-DO IT IN EXCEL, AND SHOW THE FORMULASIf the company purchases the machine, its cost of $276,000 will be financed with a loan at 14.8% interest for three years requiring equal annual payments including principal and interest. The machine will be depreciated at 20% per year. The company will pay $8,000 per year for maintenance services. The company plans to keep the machine even after its payback period. What is the total amount paid? A) $236,337.96 B) $304,972.67 C) None of the above D) $361,442.71 (Choose one option)
What is the FW?PW?AW?
You estimated the NOI of your building to be $271,000; with operating costs of $29,000 per year. If the occupancy rate was 83%; what was the potential income on this property? A) $155,000 B) $162,153 C) $263,932 D) $361,446
(a) New manufacturing equipment costs $225,000, salvage value is $25,000, and average annual earnings of $20,000 after taxes is expected. Find the average annual rate of return. If the earnings are doubled, then what is the rate?(b) Investment for new equipment is $100,000, and the salvage value is $10,000. Average yearly earnings from this equipment are $15,000 after taxes. What is the non-time-value-ofmoney return? When is the payback?
6. After spending $10,400 on client-development, you have just been offered a big production contract by a new client. The contract will add $206,000 to your revenues for each of the next five years and it will cost you $99,000 per year to make the additional product. You will have to use some existing equipment and buy new equipment as well. The existing equipment is fully depreciated, but could be sold for $49,000 now. If you use it in the project, it will be worthless at the end of the project. You will buy new equipment valued at $28,000 and use the 5-year MACRS schedule to depreciate it. It will be worthless at the end of the project. Your current production manager earns $85,000 per year. Since she is busy with ongoing projects, you are planning to hire an assistant at $44,000 per year to help with the expansion. You will have to immediately increase your inventory from $20,000 to $30,000. It will return to $20,000 at the end of the project. Your company's tax rate is 21% and…
3. Once upon a time, XYZ Company bought a piece of machinery for $300,000. The net book value of the machine is currently $60,000. The company could spend $100,000 on updating the machine and use to produce the new product which could generate a contribution of $150,000. The machine would be depreciated at $60,000 per annum. Alternatively, if the machine is not updated, the company could sell it now for $75,000. Required: What is the relevant cost of the machine that should be considered in determining whether to produce the new product or not?
4. We-Clean-U, Inc., expects to receive $65,000 each year for 5 years from the sale of its newest soap, OnGuard. There will be an initial investment in new equipment of $150,000. The expenses of manufacturing and selling the soap will be $17,500 per year. Straight-Line Depreciation is to be used with $5,000 Salvage Value. Annual income tax rate is at 30%. a. Compute the ATCF for the 5-year period using the tabular method (Show YEAR, BTCF, DEPRECIATION, TAXABLE INCOME, INCOME TAX, ATCF). b. If the MARR for We-Clean-U is 12%, is OnGuard a worthwhile investment?

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